Loudeye Acquires Activate for $4 Million

Loudeye (www.loudeye.com) announced on Tuesday that it is acquiring enterprise webcasting company, Activate. The transaction is valued at $4 million; $1 million in cash, plus $3 million in stock or cash after one year. The transaction marries the two Seattle-based companies, and strengthens Loudeye's enterprise streaming business. Recently, Loudeye has been on a buying spree to start its just launched Internet radio service.

Activate (www.activate.com), a CMGI company founded in 1997, has customers that include Microsoft, EMC, Compaq, Adobe and others. Loudeye has been primarily focused on providing music samples to e-commerce sites, and creating Internet radio stations for companies.

Commenting on the acquisition, Loudeye CEO John T. Baker said, "Enterprise streaming is a logical extension of Loudeye's digital media expertise into a lucrative market on the threshold of accelerated growth. This acquisition will significantly strengthen and diversify Loudeye's revenue mix and increase future earnings potential by accessing existing corporate budgets for training, product marketing, sales support, corporate communications, customer service, public relations and travel."

According to the companies, Activate generated revenues of $7.7 million in 2000, although it's still in the red. Loudeye said it anticipates that Activate will turn cash flow positive by the end of 2002.

In weeks prior to the acquisition, Activate eliminated some positions, cutting back from about 140 employees to 85 as of today. The 85 employees will remain with the combined entity. Activate president and COO Dennis Shepard will assume the president and general manager positions of the Activate subsidiary under Loudeye. Activate CEO Jeff Schrock will continue with Loudeye in an advisory role.