RealNetworks Buys WiderThan

RealNetworks has announced that it is buying the mobile entertainment services group, WiderThan for approximately $350 million. WiderThan is a provider of ringback tones, music-on-demand and other mobile entertainment services to more than 50 wireless carriers in more than 25 countries including leading carriers such as SK Telecom in South Korea, Verizon Wireless in the USA, and Bharti Airtel in India.

For the six months ended June 30, 2006, WiderThan achieved US$61.9 million in revenue, an increase of 39% over the same period in 2005. Net income for the first six months of 2006 was $7.4 million, an increase of 79% from the prior year, and adjusted EBITDA for the first six months of 2006 increased 64% to $14.2 million, compared to the previous year. As of June 30, 2006, WiderThan had approximately $93 million of cash, cash equivalents and short-term financial instruments.

"WiderThan is a world leader in mobile music services," said Rob Glaser, Chairman and CEO of RealNetworks. "Indeed, RealNetworks and WiderThan share a common tradition of technical innovation and end-to-end excellence in digital media. We believe the combination of RealNetworks and WiderThan will greatly enhance our digital entertainment products and services and accelerate our reach around the world."

One of WiderThan's key customers and strategic partners is SK Telecom, the largest wireless carrier in South Korea. "SK Telecom has enjoyed a long-standing, strategic relationship with WiderThan over the years and we look forward to continuing that relationship with RealNetworks, also an early pioneer in digital media, as we continue to collaborate on developing more innovative, mobile applications for our customers," said Mr. Won Soo Shin, Head of Content Business Division for SK Telecom.

Together, ringback tones (RBT) and Music-on-Demand (MoD) constitute key emerging services in a mobile entertainment market, which according to Juniper Research will grow from $15 billion in 2005 to $38 billion in 2009, a compound annual growth rate (CAGR) of 25%. According to industry analyst firm ABI Research, RBT will grow from $65 million in 2005 to $2.5 billion in 2009, a CAGR of 149%. Today, WiderThan and SK Telecom have achieved approximately 43% RBT penetration of SK Telecom's approximately 20 million subscribers. WiderThan is well positioned to meet growing demand as the RBT provider for the some of the largest carriers in the U.S., India, the Philippines and Portugal.

According to ABI Research, global MoD revenues are expected to grow from $252 million in 2005 to $4.8 billion in 2009, a CAGR of 109%. Today, WiderThan powers the music services of two market leaders, SK Telecom and Verizon Wireless, which combined have approximately 75 million addressable subscribers.

RealNetworks intends to keep the WiderThan brand intact and operate the business as a wholly owned subsidiary and intends to maintain its existing employee base."

Posted to the site on 15th September 2006