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RealNetworks mulls buys after Microsoft payout

Posted by iTech - 2005-10-19

Internet media software company RealNetworks is mulling more acquisitions after receiving a $761-million payout from Microsoft Corp. to settle an antitrust case, its chief executive said on Tuesday.
"Our two growth businesses have been music and games so if you could do acquisitions that accelerate that I wouldn't rule it out," Rob Glaser told Reuters in an interview on the fringes of a tech conference in Athens.

"This is a business where are many kinds of opportunities," he said, declining to elaborate on specifics of any potential acquisition targets.

Software giant Microsoft agreed a week ago to pay RealNetworks $460 million in cash and to invest $301 million in promoting RealNetworks' Rhapsody online music subscription service on Microsoft's MSN website.

RealNetworks had sued Microsoft almost two years ago, saying Microsoft's decision to bundle Windows Media Player for free within the Windows operating system was an abuse of its market dominance and had harmed RealNetworks' sales.

Rob Glaser -- a former protege of Microsoft founder Bill Gates before he left fo start his own company, built his business on the RealPlayer software for playing video and audio on computers -- a rival to Microsoft's Media Player.

In response to the Microsoft competition, RealNetworks shifted toward online music and games, buying PC games firms GameHouse and Mr Goodliving after acquiring listen.com -- the company that brought it the Rhapsody service -- in 2003.

Glaser said, however, he was in no rush to buy more companies, despite the Microsoft cash that he said would boost RealNetworks' cash and equivalents to above $800 million by the end of the year -- more than twice last year's sales.

"I'd rather do four acquisitions that work than do eight, six of which work," he said. "We'd probably look at more opportunities now but I couldn't predict that the velocity will increase."

He said he was not currently in any talks with Steve Jobs, chief executive of Apple Computer Inc., which dominates the online music business with its wildly popular iPod mobile music player and iTunes software.

"Right now it's a dormant stage in that relationship."

Glaser added he was ready to put aside rivalry with Microsoft to make the new cooperation, which will also give RealNetworks access to Windows technologies to enhance the RealPlayer software, work.

"We're sincere about wanting a collaborative relationship with Microsoft," he said.

Asked whether he could imagine ever returning to Microsoft, Glaser said: "I think I enjoy working for a company of a size big enough to get things done but that's still nimble."

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