Roxio acquires Pressplay as the foundation for the re-launch of Napster
The Global Leader in CD and DVD Recording Software Adds Premier Legal Online Music Service to its Digital Media Assets
Universal Music and Sony Music Entertainment now Minority Stockholders in Roxio
Santa Clara, California - (May 19, 2003) - Roxio (NASDAQ:ROXI), The Digital Media Company®, provider of the best selling digital media software in the world, today announced that it acquired Pressplay, the nation's premier online music service. As a result of this transaction, Roxio has acquired a legal digital music distribution infrastructure and catalog rights with all five major music labels. Pressplay will serve as the foundation for the launch of Roxio's new legal on line music service under the Napster brand.
"Roxio's acquisition of Pressplay significantly accelerates the development of our online music business which is central to the strategic development of our company," said Chris Gorog, Roxio's Chairman and CEO. "With our acquisition of Napster we obtained the most powerful brand in the online music space. Now, with our acquisition of Pressplay, we have the most complete and
scaleable legal technology infrastructure to use as a platform to
re-launch Napster. After taking the necessary time to add features,
enhance functionality and improve usability we will launch a new
service with an extremely compelling consumer experience that builds
on the qualities of the Napster brand."
Under the terms of its agreement, Roxio has acquired substantially
all of the interests of Pressplay, the joint venture of Universal
Music Group (UMG) and Sony Music Entertainment (SME). Roxio purchased
its majority ownership for $12.5 million in cash and approximately
3.9 million shares of Roxio common stock. Based on Roxio's
closing stock price on May 16, 2003, the purchase price would be
approximately $39.5 million excluding transaction costs estimated
at approximately $1 million. In addition, SME and UMG each have
the right to earn up to $6.25 million based on positive cash flows
resulting from the new Napster service.
UMG and SME will each provide a representative to join Roxio's
board of directors. Pressplay's president, Mike Bebel, will
report directly to Chris Gorog, and Pressplay's senior management
team and its offices in Los Angeles and New York will remain in
"Online music is highly synergistic with our core business of CD/DVD
recording and digital media software and will be of great interest
to our global customer base of over 100 million digital media consumers.
Very significant positive changes have recently occurred in the
legal online music sector resulting in far greater availability
of content and much broader flexibility for consumers. We believe
these critical changes now provide an environment for a very positive
consumer experience which will help propel the growth of this industry,"
concluded Mr. Gorog.
Zach Horowitz, President and COO of Universal Music Group, said, "The
potential of the legitimate online music market is only now becoming
apparent. Pressplay was an early mover in this area and has already
established itself as a significant force. The combination of Pressplay,
Roxio and Napster uniquely positions the service for the future.
We are excited to continue to be part of that future by becoming
a major shareholder in Roxio and look forward to working with Chris
Gorog and his team to find new ways to make the online music experience
an especially compelling one."
Robert Bowlin, Executive Vice President, Sony Music Entertainment said, "When
Pressplay launched in 2001, one of its great differentiating features,
CD burning, was made possible by its relationship with Roxio. We
believe that the combination of Roxio's strong software expertise
and its Napster brand with Pressplay's unique programming
and depth of content, will create an unparalleled service for music
"We are tremendously excited about becoming part of Roxio.
The synthesis of our online music service, new technology developments
and the Napster brand will result in an offering that we expect
will surpass the usability and features of all other legal online
music services," said Mike Bebel, President of Pressplay.
In commenting on the immediate financial impact of the transaction
Roxio's CFO Elliot Carpenter said "We anticipate spending
approximately $20 million to fund the relaunch of Napster. Following
the relaunch we expect that this new business will result in negative
cash flows until the service is widely adopted." Roxio will
provide a more detailed outlook of the financial impact of this
transaction to its fiscal first quarter ending June 30th as part
of its year end and fourth quarter earnings conference call already
scheduled for May 21, 2003.
Pressplay is the leading online music subscription service that
offers music fans the widest variety of music, unlimited listening
and broad portability options. Pressplay was conceived as an equally
held joint venture between Sony Music Entertainment and Universal
Music Group (a unit of Vivendi Universal), and launched in December
2001. It has offices in Los Angeles and New York City. Music companies,
including BMG, EMI Recorded Music, Sony Music Entertainment, Universal
Music Group and Warner Music Group, as well as numerous independent
labels, separately provide their content to pressplay on a non-exclusive
basis. Pressplay is marketed to consumers through relationships
with Gateway, HP, MP3.com, MSN Music, Rio, Roxio, Sony Music Club
and Yahoo! For more information, visit pressplay at
Roxio, a division of Sonic Solutions, develops and markets the best-selling digital media software in the world. Roxio offers
award-winning software products for CD/DVD burning, photo editing and video editing and has an installed base of over 150 million
users. Roxio distributes its products globally through strategic partnerships with major hardware manufacturers, through leading
retailers, through Internet partnerships and through direct sales at www.roxio.com. Roxio's
parent company, Sonic Solutions (NASDAQ: SNIC;
http://www.sonic.com) is the leader in digital media software and provides a broad range of software
tools and applications for creative professionals, business and home users and technology partners. Sonic's products range from professional
DVD authoring systems and interactive content delivery technologies that are used to produce the majority of Hollywood movies released on DVD,
to the award-winning Roxio- and Sonic-branded CD and DVD creation, playback and backup applications that have become the premiere solutions
for consumers and business users worldwide. Sonic's AuthorScript® is the de facto standard for CD and DVD burning and formatting and has
been licensed by major software and hardware manufacturers, including Adobe, Broadcom, Microsoft, Scientific-Atlanta, Sony, and many others.
Sonic Solutions is headquartered in Marin County, California.
Sonic, the Sonic logo, Sonic Solutions, Roxio, MyDVD, CineMagic, Plug & Burn, LiveShare, Roxio Easy Media Creator, and
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to change without notice.