RealNetworks (Nasdaq: RNWK) has a 5 PM EST conference call planned to discuss the financial details of the new JV company, but it just filed an 8-K with details. Real will get 51 percent, while MTVN will get 49 percent of the new company. Other details (pic on the right: Rob Glaser, CEO of RealNetworks, John Stratton, SVP of Verizon Communications and Van Toffler, president, MTV Networks’ Music/Logo/Films Group).
-- Rhapsody America is to operate primarily in the United States, although the parties are not precluded from expanding the territory in the future by mutual agreement.
-- The assets contributed by Real generally consist of its Rhapsody service subscribers, a cash contribution, certain employees, contracts, revenue from existing Rhapsody subscribers, marketing materials, player hardware, rhapsody.com and related URLs, and distribution arrangements. Real will also license certain assets to Rhapsody America, including Rhapsody content, the Rhapsody brands and related materials.
-- MTVN will contribute cash, a five-year note for $230 million and other assets, including its existing URGE subscribers and marketing materials. MTVN will also license certain assets to Rhapsody America, including URGE content, brands and related materials. Rhapsody America is obligated to purchase $230 million in advertising on MTVN cable channels, and will receive additional integrated marketing, over the term of the agreement, which I suppose is what the note it.
-- Rhapsody America will be governed by a joint committee comprised of four members with two members appointed by each of Real and MTVN.
-- In case the JV company is sold, and if a portion of the purchase price for MTVN’s interest is paid in shares of capital stock of Real, “such shares will consist of common stock of Real representing up to 15% of the outstanding shares of common stock of Real immediately prior to the transaction, and shares of non-voting stock representing up to an additional 4.9% of the outstanding shares of common stock immediately prior to the transaction.”
-- Real expects the formation of Rhapsody America to generate incremental revenue of approximately $0.5 million for Q307 and approximately $2 to $3 million for the remainder of 2007.

Update: One more thought, this is Real’s second music JV try...the first one was MusicNet, the music JV started in 2001 with the music labels, on which it lost a bunch of money and the assets were sold off to PE firm Baker Capital in 2005. The JV structure was so unwieldy, it had to then go out and buy Listen/Rhapsody. And now, it does another JV. Another speculative question: Did Viacom look at buying Napster before it went with RealNetworks? Probably, because NAPS has been for sale for a long time.

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