In the interest of information (and not the self-interest of spam), here's the article (no need to go to http:/netnusianse.com for the story):
April 2, 1999
Broadcast.com Deal Means Gains for Net-Media Firms
By NICK WINGFIELD
THE WALL STREET JOURNAL INTERACTIVE EDITION
Now that the Web's biggest portal has acquired one of the Web's most
popular sources of multimedia content, what happens to RealNetworks,
the Seattle company that pioneered audio and video broadcasting over the
Internet?
Good things, judging by the reaction from investors to Yahoo!'s $6.1
billion acquisition of broadcast.com. RealNetworks' stock soared 35
11/16, or 29%, to 157 7/8 in heavy trading on the Nasdaq Stock Market.
But investors weren't too picky. Any stock associated with streaming
media, a popular technique for transmitting audio and video over the
Internet, took off Thursday, including the broadcasting hub site
Audiohighway.com, which rose 1 11/16 to 12 3/4, and streaming software
provider InterVU, which jumped 15 1/8, or 34%, to 59 1/2.
The Nasdaq Composite Index rose 31.97 to 2493.37, while Morgan
Stanley's high-tech 35 index climbed 17.38 to 1037.83. The Dow Jones
Composite Internet Index, meanwhile, moved up 6.48 to 250.95.
Predictably, the Yahoo-broadcast.com marriage fueled speculation about
whether RealNetworks will remain independent or get swallowed by a
larger firm. Founded in 1995 as Progressive Networks, the company has
become virtually synonymous with streaming media thanks to the popularity
of its RealPlayer software, which the company says has more than 50
million registered users. According to some research estimates,
RealNetworks' player is used to see or hear more than 80% of all
streaming media on the Internet, with Microsoft's Media Player a distant
second.
With those assets, analysts believe the company is an attractive takeover
candidate for a number of different players, and will become all the more
attractive as high-speed Internet connections capable of carrying
multimedia become more prevalent. According to people close to the
company, RealNetworks has been approached in the past by both
America Online and AT&T about possible partnerships, including an
acquisition, but the company maintains that it wants to remain independent.
"I don't think RealNetworks is open to negotiations," said Robert Martin,
an analyst at Friedman Billings Ramsey. "They're probably talking to others
-- I don't doubt that."
Likewise, David Readerman, an analyst with Thomas Weisel Partners
LLC, said he wouldn't rule out a major deal involving RealNetworks given
the breakneck pace of consolidation in the Internet market.
"We're certainly seeing a very active M&A period right now," said Mr.
Readerman. "To the extent that many of these acquisitions are funded with
Internet paper, anything is possible given current valuations."
AOL, which already distributes the RealPlayer with its online-access
software, is considered by many as a logical suitor for RealNetworks.
AOL's most prominent past acquisitions -- its buyout of Mirabilis and its
acquisition of Netscape Communications -- have involved companies that
control popular "persistent clients," programs that remain at the forefront of
a user's computer screen even as the user flits through chat groups, Web
pages and other activities.
An AOL spokeswoman couldn't be reached for comment, and Steve
Haworth, a RealNetworks spokesman, hewed to the company line: "We
emphatically plan to continue on our independent and successful path."
With broadcast.com now part of Yahoo's expansive portfolio of sites,
RealNetworks may begin competing more vigorously with the Web's
leading navigation service. In addition to its software business,
RealNetworks operates a collection of advertising-supported sites that
aggregate multimedia content such as music concerts and sportscasts -- the
same business broadcast.com is in. While RealNetworks often links to
broadcast.com's content from those sites, the company's expanding media
efforts have complicated its relationship with software customers like
broadcast.com.
"There are competitive and collaborative aspects to our relationship with
broadcast.com," said Mr. Haworth.
Still, advertising on RealNetworks' collection of sites amounted to only 5%
of its total 1998 revenues of $64.8 million. But analysts like Mr. Martin
believe the company could bring in more than $80 million in new
advertising by 2001 if it begins to more aggressively exploit the RealPlayer
by beaming promotions directly to the software.
Mr. Haworth, for one, said the company wasn't losing sleep over the
Yahoo acquisition. "I think it's a strong endorsement of streaming media
from the most-trafficked portal," he said. "As the leader in streaming
media, that is good for us."
Thursday's Market Activity
Elsewhere, investors gave the Yahoo-broadcast.com deal a thumb's-up:
Yahoo's shares advanced 11 3/8 to 179 3/4 and broadcast.com's shares
climbed 11 13/16 to 130.
Wireless-phone equipment maker Qualcomm advanced 12 5/8 to 137 as
investors continued to celebrate the deal the company made last week that
settled a long and bitter patent dispute with AB L.M. Ericsson Telefon.
Write to Nick Wingfield at Nick.Wingfield@news.wsj.com. |
