Entertainment Company Created By AOL, XM Radio
Wednesday, July 13, 2005
XM Satellite Radio Holdings Inc. has teamed up with America Online Inc. and concert producer and promoter AEG in a venture that will provide concerts, comedy shows and other events for customers on the Internet, wireless devices and other platforms.
The new company, called Network Live, will license its live and on-demand programming to Internet companies and wireless distributors. It will also seek advertisers and corporate sponsors and hopes to eventually syndicate its programming, said Kevin Wall, Network Live's chief executive. Wall and the three participating companies own equity stakes in the venture. Further financial terms of the deal were not disclosed.
Network Live will be modeled after the Internet-distribution method Wall and AOL used for the Live 8 concerts held on July 2. Wall was executive producer of the simultaneous concerts, organized to raise awareness of poverty. The shows were broadcast on an AOL Web site accessible to non-AOL subscribers. More than 2 million XM subscribers tuned in to listen to the concerts, which XM aired on seven channels.
Internet viewers could jump between the concert in London and the one in Philadelphia. ABC viewers had to watch a single, edited global feed. The ABC broadcast drew just 2.9 million viewers. MTV attracted 1.5 million. The Internet broadcast drew 5 million unique hits.
With the rapid expansion of digital forms of entertainment, the Network Live venture is a "win-win" for everyone involved, though not necessarily in the form of profit, said Standard & Poor's analyst Tuna Amobi.
AEG might not make money from Network Live, as a large chunk of the revenue would go to the artists, said chief executive Timothy J. Leiweke.
But the venture offers AEG, which owns or operates eight venues such as the Staples Center in Los Angeles and produces concerts and shows, a novel way to promote its events and deliver its content to new audiences. A toehold in the fast-growing digital entertainment business could give the privately held AEG -- owned by Denver billionaire Philip F. Anschutz -- an edge over much larger competitor Clear Channel Entertainment Inc. Both companies have suffered with a sluggish market over the past two years, Amobi said.
For District-based XM, Network Live offers a steady content stream. That will help it in its battle for subscribers with rival Sirius Satellite Radio Inc. XM's 4.4 million subscribers pay $12.95 a month for more than 150 channels of music, news, entertainment and sports.
For AOL, Network Live could draw in advertisers as the company continues to shift from its original subscription-based business, said Jim Bankoff, senior vice president of programming and productions. Dulles-based AOL, a division of Time Warner Inc., has been losing 2 million subscribers a year.
AOL already offers streaming Internet of live music events for nonsubscribers through its AOL Music site. But Live 8 was a "validation" for distributing live programs on the Internet, Bankoff said. "If artists want to get involved, they want to do it with someone who has experience. We proved that with Live 8," he said.
Amobi cautioned that Live 8 was might not ensure Network Live's success. "The Live 8 show created some excitement, but over the long term, its viability remains to be seen. There's going to be competition among digital entertainment outlets," Amobi said.
But Wall and his partners already have big plans for Network Live, such as designing venues with cameras that allow consumers to customize their view of a concert on the Internet. "Today's networks are very vertical, made up of a number of stations across a geographic area," while Network Live is "a horizontal network," said Wall. "We're taking AOL or satellite radio or other partners in digital cinema or wireless . . . and producing content you can access anytime, anywhere, on any device you like."