by José Alvear
June 29, 2001

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Yahoo! announced on Thursday that it was acquiring music site Launch Media (www.launch.com) for about $12 million. Yahoo! said that it wants to become the "premier entertainment destination on the web." Additionally, Yahoo! is extending a $3 million short-term secured debt financing to Launch in addition to its previous $2 million in May 2001.

"It's a very good deal for shareholders and for us. We're all excited about the opportunity to expand what we've been doing," said Launch CEO David Goldberg.

For Yahoo!, which acquired Broadcast.com for about $4 billion two years ago, this is its biggest step yet into the music space. Last year Yahoo! unveiled its own media player, built on Windows Media, as well as its own music, broadcast and radio sites. Goldberg said that the two companies were not clear on whether the Launch site would be integrated into Yahoo's music sites or whether it'd remain independent. "We haven't decided what to do; we've been working on the deal nonstop," said.

"LAUNCH Media possesses a large audience, a seasoned team of music industry veterans, and the broadest array of music and music-related content available on the Web today," said Ellen Siminoff, Yahoo!’s senior vice president of entertainment and small business, in a statement. "These strong core assets will enhance Yahoo!’s current entertainment offerings and strengthen our leadership position in this space."

Launch also announced that it has settled its copyright infringement suit with Universal Music Group in connection with its Internet radio service, LAUNCHcast. It will add Universal music to its LAUNCHcast service, adding to current Warner music. Aside from these two labels, Launch still has suits pending with EMI, BMG and Sony. Goldberg said the company is still negotiating with the labels.

"We don't think the [LAUNCHcast] service is any trouble," Goldberg explained. "Universal is a great step, but we can't negotiate with four parties at once."

Launch also said it was going to sell off its Vans Warped Tour, to its previous owners. It will continue to operate and control the tour for 2001.

Launch's operations will continue to be based in Santa Monica following the completion of the acquisition and co-founders, Goldberg and President Bob Roback, will remain with the company. Goldberg said that the Yahoo! will keep Launch's team as well.

The acquisition is expected to be completed in the third quarter of 2001.