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Streaming Media News Roundup

At the top of the news today, Cable & Wireless announced that it has completed acquiring the assets of Exodus, the bankrupt hosting provider. It will be combined with the hosting business of Digital Island and C&W. The deal was valued at $750 million.

More Bankruptcies, More Acquisitions

In a continuing sign of the still-struggling economy, more companies are closing their doors. In January, streaming media provider ST3 said it was filing for Chapter 7 bankruptcy after coming up short in its next round of funding.

Chattanooga,TN-based ST3 had an impressive list of clients, including BroadStream, SurferNetwork, Media Station and eMotion. "There was a tremendous opportunity here for investors to take advantage of the growing streaming media market," said Jay Kern, CEO of st3 (www.st3.com), in a statement. "st3’s year-end sales for 2001 surpassed our expectations. However, the economic climate since Q4, 2001 has greatly hampered capital fundraising of any kind. st3 is no exception."

Other struggling streaming companies are being sold off. Sonic Garden, Inc. announced on Thursday that it was acquiring a majority interest in Cablemusic Networks, Inc., a popular Internet-only radio site. Cablemusic (www.cablemusic.com) was founded in 1999, and has been at the top of the Arbitron webcast ratings in recent months. Arbitron reported that Cablemusic had 978,100 Aggregate Tuning Hours (ATH) in December 2001, which was number two for the month behind Live365’s 3,847,300 hours. Sonic Garden (www.sonicgarden.com) has a music community that lets artists promote their own music. Artists can upload videos, tour information and band news to their pages. Financial details of the acquisition were not released.

Also, Visual Data said it was acquiring MediaOnDemand.com, a streaming media solutions provider. The company will be acquired for 3.4 million shares of Visual Data common stock and will become a wholly owned subsidiary of Visual Data. MediaOnDemand (www.mediaondemand.com) reportedly had over $3 million in revenue over the past two years, although the company didn’t say if it was ever profitable. MediaOnDemand’s client list includes UBS Warburg, Merrill Lynch, Lehman Brothers, McGraw-Hill Companies, Inc., New York Stock Exchange, American Stock Exchange, and the Federal Reserve Bank among others.

In yet another deal this week, Streaming Media Corporation said it was acquiring the assets of streaming pioneer e-Media, a Stamford, CT-based streaming provider. Financial terms of the deal weren’t announced. After being founded in 1995, e-Media worked with the World Wrestling Foundation to start its pay-per-view streaming application. That PPV has since been discontinued, and e-Media has gone after the corporate streaming market. Some of e-Media’s 100 clients include Sandler O'Neill, Bertelsmann, FMiTV and the NHL.

Streaming Media Corporation said it has hired key e-Media personnel in a variety of positions, although did not say how many employees were laid off.

Companies Get Funding

Despite some bad news, companies are still managing to get funding. Audible (www.audible.com) announced on Monday that it was executing a $3.5 million private equity investment agreement with the New York-based institutional investment firm, Special Situations Funds. The company said this investment, plus "increased operating efficiencies" means that it has lowered its cash burn rate. Audible said that it used $2 million in cash during Q4 2001, down from $5.6 million, or a decrease of 64%, from Q3 2001.

Sonic Foundry (www.sonicfoundry.com), announced that it completed a $3.2 million offering of convertible subordinated debt with "certain investors," including one unnamed institutional holder. The debt carries interest at 10% per annum and is convertible into shares of common stock at a fixed rate of $2.45, subject to certain anti dilution adjustments. The investors also received warrants to purchase 528,000 shares of common stock with a strike price of $2.94 per share.

A brand new company got funding this week. videoNEXT, Inc., a provider of video applications over the Internet, announced today that the Company has closed on a Series C funding. Lead investors were New England Partners Capital, L.P. and Kirnaf LTD comprising an investment of $2 million in videoNEXT's Convertible Preferred Stock. VideoNEXT (www.videonext.com) provides solutions like point-to-point and multipoint video conferencing, video surveillance with remote monitoring through its NEXTcam videoPBX box.

Also, Fast-Talk Communications (www.fast-talk.com), an audio searching company, announced it closed its series B funding totaling $8.5 million. Backers include Boston Millennia Partners, SAIC Venture Capital Corporation (SAIC-VCC), Cordova Ventures, and the Atlanta Technology Angels. Fast-Talk lets users search audio and video through phonetic software products, without using speech-to-text conversion. The company claims that its technology can identify and retrieve any "word, proper name, phrase or slang term with up to 98% accuracy."

Pepsi, Yahoo! and Britney

Yahoo! is going streaming on Super Bowl Sunday. During the first half of the game, Pepsi will be showing off its new 90-second commercial featuring Britney Spears called "Now and Then." At the same time, the new commercial will also be shown exclusively on the Yahoo! home page. Yahoo! said that this will be the first time that it has ever offered a streaming video commercial on its home page.

To create buzz, Yahoo! has given many of its banner ads to Pepsi’s Britney ads. Visitors that click through to Pepsi’s site (pepsi.yahoo.com/britney) can see behind-the-scenes clips of the commercials, plus vote on which 30-second commercial they want to see in the second half of the big game.

The Britney Spears web shows were created with the help of Dogmatic (www.dogmatic.tv), an interactive production agency. Dogmatic also created the popular "Pork Fizz" shows for Pepsi last year, which reportedly drew over 425,000 downloads during its first six months of release.

Notable Departures

There have been some notable exits by key streaming media executives. Dan Rayburn, product manager for streaming media at Globix said he was leaving the company, and Carlos Montalvo announced he was leaving Virage and moving to WebWare.

After Globix announced it was filing for bankruptcy, Rayburn sent out an e-mail to colleagues saying that he was leaving. "After nearly (4) years at GLOBIX, the time has come to move on," his message stated. Rayburn went on to say that he would still stay in the streaming business and that he was taking time to look at his options. His e-mail contained a link to his personal web site DanRayburn.com.

Meanwhile, Carlos Montalvo, formerly chief marketing officer at Virage, announced he had moved over to WebWare, keeping his same title. Montalvo will oversee marketing, business development, and sales at the digital asset management company. Previously, Montalvo was corporate vice president and general manager of Apple’s Interactive Media Group, concentrating on QuickTime products.

Kermit and DivX

DivXNetworks, the company that’s trying to push the popularity of the DivX video format, said that the Jim Henson Company had licensed its compression technology for an upcoming campaign. The Jim Henson Company will use the DivX codec to commemorate the 25th anniversary of "The Muppet Show" by distributing promotional CDs with video clips.

"Our marketing efforts surrounding The Muppet Show 25th anniversary campaign consistently reflect the excellence of the Muppet brand, which is why we felt it was important to choose the best possible video technology for distribution of promotional clips," said Mike Polis, Senior Vice President of Marketing Worldwide at The Jim Henson Company, in a statement.

DivXNetworks (www.divxnetworks.com) has been making strides with its codec, which it claims was built on the MPEG-4. Still, the DivX codec is not compliant with ISMA MPEG-4 specifications, so it can’t interoperate with any other MPEG-4 application.

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