Yahoo! Inc. today (June 28) announced plans to acquire struggling online music company Launch Media. The acquisition would bring Launch's news, artist features, Webcasting, and streaming video content
Yahoo! Inc. today (June 28) announced plans to acquire struggling online music company Launch Media. The acquisition would bring Launch's news, artist features, Webcasting, and streaming video content under Yahoo!'s substantial umbrella, helping the portal compete with rivals AOL and Microsoft.
Under the terms of the agreement, Yahoo! will acquire all of Launch's outstanding shares for 92 cents per share, or approximately $12 million. Launch shares, which peaked at more than $30 shortly after its April 1999 initial public offering, closed yesterday at 58 cents. At deadline shares were trading at 90 cents.
The acquisition is expected to be completed in the third quarter of this year. In connection with the deal, Yahoo! has extended $3 million in short-term funding to Launch, which is in addition to a previous $2 million extended to the company last month, then identified in an announcement as from "a major media company."
In a statement, Yahoo! said that Launch's music content will complement the company's current entertainment offerings, which include Yahoo! Broadcast, and Yahoo! Radio. While it was noted that Launch's co-founders, CEO David Goldberg and President Bob Roback, will remain following the acquisition, no mention was made of the fate of the company's staff in its Santa Monica, Calif., headquarters or its New York and Nashville branches.
Not part of the deal is Launch's ownership of the alternative rock Warped! tour. While Launch will continue to operate this year's edition of the tour -- which kicked off June 22 in Phoenix, and will run through Aug. 12 in Pontiac, Mich. -- the company will exchange its ownership of the tour for 394,235 shares of Launch stock held by the other participants in the tour, which include Creative Artists Agency and clothing manufacturer Vans, Inc. Launch will retain its exclusive right to sell sponsorships for the 2002 and 2003 Warped! tours
Launch also announced that it has reached an agreement with the Universal Music Group (UMG) over a copyright infringement suit brought by the Recording Industry Association of America in May on behalf of UMG and the other major record labels over its Launchcast Internet radio service. Along with agreeing to pay UMG for past performances of the label's music through the service, Launch has entered into a non-exclusive license with the label for use of its recordings. No settlement has yet been reached with any of the other major labels.