WHAT: Sony Corp. agreed to sell its Gracenote music database subsidiary to TV/newspaper conglomerate Tribune for $170 million, a 35% discount from the $260 million that Sony paid for Gracenote in 2008. The transaction is set to close by the end of March. Gracenote launched in 1998 gathering data on CDs and vinyl albums. It’s since branched out to TV shows, boasting a database of 180 million music tracks and TV shows. Apple uses Gracenote to identify CDs that people copy to their iTunes libraries.
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WHY: Tribune, which owns 23 TV stations and eight daily newspapers including the Los Angeles Times and Chicago Tribune, says it will combine Gracenote into Tribune Media Services, a subsidiary that serves up TV and movie listings to cable companies. Adding Gracenote will round out Tribune’s offering to include a wider breadth of entertainment information and metadata. “Both companies have substantial digital footprints and are well-respected leaders in their areas globally,” Tribune Digital Ventures president Shashi Seth said in a statement. “Together we will become an even greater force in the global entertainment data business by servicing new and existing customers with better data, new products and new services to help an evolving entertainment industry.” Sony, which has been hemorrhaging money and market share from its consumer electronics business, is selling Gracenote as part of chief executive Kazuo Hirai’s larger effort to streamline the Japanese giant’s business and jettison unrelated properties. Last year, Sony sold off properties that generated $2.5 billion in net cash. Sony says it has already factored in an operating income of $60 million from the sale for its current fiscal year ending March 31.
WHO: Tribune has said it would spin off its troubled newspaper holdings and is now delving deeper into the more lucrative TV side of its business that includes TMS. The Chicago media company already has a tight relationship with Gracenote, which uses TMS data to help its customers identify TV shows and place targeted ads against them. “Prior to the acquisition, Tribune was a key data partner,” Gracenote CEO Stephen White says. “We’ve built complementary assets.”
IF: Tribune is unlikely to be as hands-off an owner with Gracenote as Sony had been. White wouldn’t talk about Tribune’s plans, pointing out that the acquisition hasn’t yet closed. Instead, he notes that both companies have “complementary” technologies rather than overlaps that could lead to large layoffs or major changes in senior management. As digitization becomes the dominant format for music and entertainment distribution, expertise in managing metadata across a wide range of platforms could enable Tribune to build an unglamorous but essential entertainment data behemoth.