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Insight Communications and Source Media Create Joint Venture to Bring Interactive Television to Cable Subscribers
Insight to Invest $13 Million in New Company and $12 Million in Source Media
NEW YORK and DALLAS, July 29 /PRNewswire/ -- Insight Communications Company Inc. (Nasdaq: ICCI - news) and Source Media, Inc. (Nasdaq: SRCM - news) today announced that they have signed definitive agreements to form a joint venture to provide a truly ''Interactive'' television portal.
Under the terms of the transaction, Source Media will contribute its VirtualModem(TM) 2.5 software, the Interactive Channel's gridless, server-based navigator, SourceGuide(SM), LocalSource(SM) television content and will manage the operations of the joint venture. Insight Communications is providing $13 million in equity financing for the new venture. Source Media and Insight will each own 50% of the joint venture.
In addition, Insight will purchase 842,105 shares of Source Media Inc. Common Stock for $12 million, representing approximately 6% of the issued and outstanding stock of the company. Source Media will also issue to Insight five-year warrants to purchase additional shares of Source Media Common Stock at $20 per share, representing approximately 20% of Source Media's fully diluted equity. At the close of the transaction, Insight will be given representation on Source Media's Board of Directors. The transaction is subject to the final approval of Source Media's shareholders and bondholders.
''We are thrilled to be making this investment,'' noted Michael Willner, President and Chief Executive Officer of Insight Communications. ''Source Media's leading-edge technology is extremely customer-friendly and also uniquely leverages our local presence in the communities we serve. We believe that the local content provided by Source Media's technology will greatly enhance our digital distribution.''
Steve Palley, President and Chief Executive Office, Source Media, Inc., said, ''This agreement couples Source Media's innovative technology and content with Insight Communication's customer base and powerful relationships in the cable industry. We believe that millions of digital cable customers will enjoy and value the convenience and speed of interactive television. This service will ultimately change the way people view and navigate television and the Internet. Our overriding goal is to make interactivity an easy and compelling experience that is deeply localized.''
The joint venture will benefit from Source Media's core competency in developing interactive programming in, among others, music, health, education, local news and electronic magazines and directories. Last month, Source Media's Interactive Channel launched its LocalSource(SM) Television service with Insight Communications' Rockford, Illinois affiliate, the nation's first digital real-time, two-way interactive cable system. Powered by the VirtualModem(TM) software, cable customers are now able to access a broad spectrum of localized services and the Internet via the SourceGuide(SM) on-screen navigator.
The new venture will provide a full menu of leading, digital, interactive television applications like high speed Internet access, cable email, E-commerce, addressable advertising, video-on-demand ordering, deep local content and personalization. Additionally the LocalSource(SM) comprehensive, neighborhood-specific, interactive information service provides cable operators with the ability to easily customize SourceGuide(SM) for system branding and marketing opportunities. LocalSource(SM) Television is a system-specific suite of interactive digital services that provides local and national advertising opportunities and local news, weather and sports information as well as comprehensive directories.
At the heart of this suite of services and capabilities is the VirtualModem(TM) software technology, which drives all the digital applications. The anchor of these applications is the SourceGuide(SM) Navigator, a thin-client application taking up minimal amount of memory in the digital set-top, allowing cable operators to offer additional revenue-generating interactive services.
Insight Communications Company, Inc. (Nasdaq: ICCI - news) is a cable television operator, and specializes in offering a variety of state-of-the-art entertainment, educational and information services tailored to each local community. The company is currently in the process of becoming the 8th largest cable operator in the United States, upon completion of all of its announced and currently pending acquisitions. Including those pending transactions, the company will own orew York City, Insight was formed in 1985 by cable veterans Michael S. Willner and Sidney R. Knafel.
Source Media is a leader in localized new media content, advertising and technology. Source Media's interactive agency, IT Network, Inc., provides streaming media content and advertising services over PC, telephone and digital cable TV. Source Media's Interactive Channel, Inc. is the localized interactive cable TV programming service designed for today's digital cable TV programming tiers. Source Media's VirtualModem(TM) division develops the intellectual property, software, and patents behind the Company's interactive cable TV technology, which includes Internet on TV. For up-to-date information about Source Media, please access its Internet home page at sourcemedia.com.
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