Napster have re-positioned themselves since the name relaunched 3 years ago and now RealNetworks are investing big in their music services.
RealNetworks have doubled their stake in Rhapsody International, making them a majority owner of music streaming service Napster with an 84% stake. RealNetworks, a “recognised leader in digital media software and services”, received approval from the Treasury Department’s Office of Foreign Assets Control to purchase the large stake in Napster.
Before the additional stake acquisition RealNetworks held 42% in outstanding stock in Napster. With their new investment that amount has doubled to 84% making them by far the majority stock investor.
RealNetworks have offered a total of up to 40 million in investment for Napster in the future in exchange for their equity, debt and other interests in the music streaming company. They have committed to $1 million in cash up front with $14 million over time subject to condition. They would receive the full $40 million if they were to sell or another form of liquidity were to result in their 42% equity exceeding $60 million.
RealNetworks chairman/CEO and the chairman of Napster, Rob Glaser said: “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.”
RealNetworks CFO, Cary Baker added: “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 US 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.”
Napster will continue to run it’s music streaming service as an independent subsidiary of RealNetworks. The service was re-launched after it was purchased by Rhapsody in 2016 following it’s reputation as a highly popular, but legally questionable music P2P site in the early 21st century.
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