(Hypebot) RealNetworks has doubled its stake in Rhapsody International, which operates the Napster music streaming service. RealNetworks now owns 84% of Napster and will operate it as an independent subsidiary. The transaction values Napster at less than $140 million.
Bill Patrizio will continue to be Napster’s CEO, and Rob Glaser will continue as Chairman.
Rhapsody had been spun off from RealNetworks in 2010.
RealNetworks has committed to pay just $1 million cash up front and an additional $14 million “over time subject to certain conditions.” If Napster performs, the total payment could total of up to $40 million. The entity managed by CNTP would receive the full $40 million in the case of a sale or similar liquidity event within the next five years where total equity value of the 42% equity interest acquired would exceed $60 million.
Rob Glaser, Chairman and CEO of RealNetworks, Chairman of Napster:
“We are very pleased to have deepened our partnership with Napster. Under Bill Patrizio’s leadership, Napster has delivered five consecutive quarters of positive operating income and generated over $14 million in operating income in the first three quarters of 2018. This success was achieved by pivoting to a B2B strategy focused on selling the Napster platform as a service. We think Napster’s future is very bright.”
Cary Baker, RealNetworks’ CFO:
“The unique deal structure is one that we believe will drive significant value for RealNetworks’ shareholders. The terms and deal structure reflect the unusual circumstances that CNTP has been operating under since a major limited partner of its managed funds – including Applebee – was sanctioned by the U.S. Government in April 2018. In spite of these circumstances, Napster continued to execute on its business plan and had a strong 2018 operationally. These circumstances are now a closed chapter for Napster.”
