RealNetworks and Viacom’s MTV Networks plan to spin off the digital audio music service Rhapsody into an independent company.
RealNetworks, currently the majority owner and operator of Rhapsody, and Viacom say they will restructure their ownership and rights in the joint venture to provide the necessary intellectual property rights to launch the new company as an independent entity.
RealNetworks also will contribute operating capital as part of the transaction. Under the terms of the deal, RealNetworks will no longer have operating control over the venture, and Rhapsody will have no single majority owner.
Rhapsody has had a tough time going up against Apple’s iTunes. Rhapsody’s service gives consumers unlimited access to more than 9 million songs, including on mobile phones from Verizon Wireless and through apps on the iPhone, iPod touch and Android platforms.
In a statement, RealNetworks acting President and CEO Robert Kimball said separating Rhapsody into its own independent company is a significant first step in making RealNetworks a more focused and profitable company. “Rhapsody will be the largest pure play digital music service in the market,” he said. “We have provided Rhapsody with the right team and financial and intellectual property assets to succeed in the competitive market for digital music.”
The transaction is expected to close at the end of the first quarter.
RealNetworks founder Rob Glaser stepped down as CEO in January but remains chairman of the board.