8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) August 4, 2003

RealNetworks, Inc.

(Exact name of registrant as specified in its charter)

WASHINGTON
(State or other	0-23137	91-1628146
jurisdiction	(Commission File	(I.R.S. Employer
of incorporation)	Number)	Identification No.)

2601 Elliott Avenue, Suite 1000
Seattle, Washington 98121
(Address of principal executive offices) (Zip code)

(206) 674-2700
Registrant’s telephone number, including area code

Not Applicable
(Former name or former address if changed since last report)

TABLE OF CONTENTS

	Item 2. Acquisition or Disposition of Assets
	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1

Item 2. Acquisition or Disposition of Assets

     On August 4, 2003, RealNetworks, Inc., a Washington corporation (“RealNetworks”), completed its acquisition (the “Acquisition”) of Listen.Com, Inc., a California corporation (“Listen”). Listen is a leading online music company that develops and distributes RHAPSODY, a digital music subscription service. The assets being acquired will serve as the foundation for RealNetworks’ legal online music service under the RealOne RHAPSODY brand.

     As a result of the Acquisition, Listen became a wholly-owned subsidiary of RealNetworks. In connection with the Acquisition, RealNetworks issued approximately 4.1 million shares of common stock (including shares issuable upon the exercise of warrants and vested options) and an aggregate of approximately $17.3 million in cash. The funds for the cash portion of the consideration were obtained from the Company’s existing cash reserves, and the common stock portion of the consideration was issued from the Company’s authorized but unissued common stock. The former common shareholders of Listen also have the right to receive up to an additional $1,500,000 on or prior to the one-year anniversary of the consummation of the Acquisition if certain conditions are satisfied. The amount of the consideration issued to the former shareholders, and option holders and warrant holders of Listen was determined by arms-length negotiation between the parties.

     Prior to the Acquisition, RealNetworks and Listen entered into a Loan and Security Agreement dated January 27, 2003 (the “Loan Agreement”) pursuant to which RealNetworks agreed to acquire an aggregate of $4,000,000 of convertible secured promissory notes of Listen and Listen agreed to incorporate certain RealNetworks technology into its products and services. On April 2, 2003, RealNetworks and Listen amended the Loan Agreement to provide for RealNetworks to acquire additional convertible secured promissory notes of Listen in the aggregate amount of $3,320,000 from time to time prior to closing, and RealNetworks subsequently acquired all of such notes. On May 22, 2003, RealNetworks and Listen entered into a Digital Music Application Distribution Agreement providing for RealNetworks to distribute a co-branded version of Listen’s RHAPSODY online music service. Other than as listed immediately above, no material relationship existed between RealNetworks or any of its affiliates, directors or officers, or any associates of such directors or officers, on the one hand, and Listen on the other hand, immediately prior to the Acquisition.

     The description of the Acquisition in this Current Report is not intended to be complete and is qualified by the more detailed information in the Acquisition agreement attached as an exhibit to this Current Report.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

     (a)  Financial Statements of Business Acquired.

     As of the date of filing of this Current Report on Form 8-K, it is impracticable for the Registrant to provide the financial statements required by this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial statements shall be filed by amendment to this Form 8-K no later than October 18, 2003.

     (b)  Pro Forma Financial Information.

          As of the date of filing of this Current Report on Form 8-K, it is impracticable for the Registrant to provide the pro forma financial information required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such financial statements shall be filed by amendment to this Form 8-K no later than October 18, 2003.

     (c)  Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Merger and Reorganization by and among RealNtworks, Inc., Symphony Acquisition Corp. I, Symphony Acquisition Corp. II, Listen.Com, Inc., Mellon Investor Services LLC, as Escrow Agent and Robert Reid, as Shareholder Representative dated as of April 21, 2003 (incorporated by reference to Exhibit 2.1 to RealNetworks, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 filed with the Securities and Exchange Commission on August 14, 2003). (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.)
99.1	Press Release dated August 5, 2003 regarding acquisition of Listen.Com, Inc.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	REALNETWORKS, INC.
	By:	/s/ Robert Kimball Robert Kimball Vice President, Legal and Business Affairs, General Counsel and Corporate Secretary
Dated: August 15, 2003

EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger and Reorganization by and among RealNtworks, Inc., Symphony Acquisition Corp. I, Symphony Acquisition Corp. II, Listen.Com, Inc., Mellon Investor Services LLC, as Escrow Agent and Robert Reid, as Shareholder Representative dated as of April 21, 2003 (incorporated by reference to Exhibit 2.1 to RealNetworks, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 filed with the Securities and Exchange Commission on August 14, 2003). (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.)
99.1	Press Release issued by RealNetworks, Inc. dated August 5, 2003.

EX-99.1 3 v92533exv99w1.htm EXHIBIT 99.1

EXHIBIT 99.1

REALNETWORKS COMPLETES ACQUISITION OF LISTEN.COM & AWARD-
WINNING RHAPSODY DIGITAL MUSIC SERVICE

12.4 Million On-Demand Songs Delivered in July — a 13% Increase Over June; Combined Company
Poised to Lead Digital Music Industry

SEATTLE — August 5, 2003 — RealNetworks®, Inc. (Nasdaq: RNWK), the global leader in digital media services and software for consumers and businesses, today announced it has completed the acquisition of Listen.com, creator of the award-winning RHAPSODY® digital music service. RealNetworks also announced that RHAPSODY delivered more than 12.4 million on-demand songs to its subscribers in July, a 13% increase over June, underscoring continued growth in consumer usage of RHAPSODY since RealNetworks launched RealOne RHAPSODY in May.

“We’re delighted to be completing the acquisition of Listen.com today,” said Rob Glaser, CEO, RealNetworks, Inc. “We’re especially pleased that we’re bringing in both Listen.com’s best-of breed RHAPSODY digital music service and the world-class team that has been building RHAPSODY for 4 years. By combining RHAPSODY with other major digital music assets, such as our popular Internet radio and jukebox products, we are poised to create the most compelling digital music experience in the world.”

“By joining with RealNetworks we are poised to take our business to the next level,” said Sean Ryan, vice president of Music Services, RealNetworks, Inc. (former chief executive officer of Listen.com.) “In addition to RealNetworks’ world class technology, RealNetworks’ broad Internet distribution fits perfectly with our existing distribution partners such as broadband operators. The continued rapid growth of RHAPSODY shows that we are absolutely on the right path.”

RHAPSODY offers consumers unlimited, ‘all you can eat’ access to the broadest library of major and independent label music with more than 350,000 tracks available for on-demand listening and more than 240,000 songs available for transferring to CD, a.k.a. ‘burning.’ At only 79¢ for any track, RHAPSODY offers subscribers the lowest per-burn price available to U.S. consumers through any of the new generation of digital music services. In addition to burning full albums or custom mix CDs, RHAPSODY subscribers can build their own custom Internet radio stations, listen to professionally programmed stations, and browse extensive music information and editorial recommendations.

With this acquisition, RealNetworks now owns two of the Internet’s best subscription content services, the critically acclaimed and market-leading RealOne™ SuperPass, which offers leading news, sports and entertainment programming, and the RHAPSODY music service. RealNetworks has more than 1 million customers of its paid content subscription services.

RHAPSODY is available as RealOne RHAPSODY via RealNetworks, with a 14-day free trial, for $9.95 a month at www.real.com. RHAPSODY is also distributed to consumers through co-branded versions of the service by: Audiogalaxy, Cablevision Systems Corporation’s Optimum Online®, Charter Communications, Down Beat, Gateway, JamBase.com, Lycos, RCN Corporation, Time Warner Cable’s Road Runner high-speed ISP, Sony’s Musiclub, Speakeasy, Sprint, and Verizon Online.

For More Information:
Lisa Amore, RealNetworks, 206-674-2221, lamore@real.com
Matt Graves, RealNetworks, 415-934-2159, mgraves@listen.com

About RealNetworks

RealNetworks is the global leader in digital media services and software for consumers and businesses. Consumers use RealNetworks’ RealOne Player and our content subscription services to create and play free and premium digital content. Broadcasters, network operators, media companies and enterprises use RealNetworks’ products and services to deliver digital media to PCs, mobile phones and consumer electronics devices. Consumers can access and experience audio/video programming and download RealNetworks’ consumer software at http://www.real.com. RealNetworks’ systems and corporate information is located at http://www.realnetworks.com.

RealNetworks, RealOne, SuperPass, Listen.com, and RHAPSODY are trademarks or registered trademark of RealNetworks, Inc.

This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to: (a) the effect of the acquisition on RealNetworks’ business and the combined business, (b) the potential of the combined businesses to create a compelling digital music experience, and (c) the continued rapid growth of RHAPSODY. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include risks regarding: whether RealNetworks will be able to successfully integrate Listen.com following the closing of the acquisition; the timely development, production and acceptance of the products, services and technologies contemplated by the proposed acquisition; competitive risks, including existing competing technologies, products and services and the emergence of new entrants; development and consumer acceptance of legal online music distribution services; the continued growth of “free” peer-to-peer services; potential litigation involving patents and intellectual property matters; and general macroeconomic trends including without limitation financial difficulties facing technology companies and the reduced demand for technology products.

More information about potential risk factors that could affect RealNetworks’ business and financial results is included in RealNetworks’ annual report on Form 10-K for the year ended December 31, 2002 and its quarterly report on Form 10-Q for the period ended March 31, 2003 and from time to time in other reports filed by RealNetworks with the Securities and Exchange Commission.

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