The deal, worth about $20.75 million in stock, will also allow Broadcast.com to increase the size of its network infrastructure. The acquisition, which is subject to certain conditions, is expected to be completed during the fourth quarter of 1998 and the transaction is intended to be accounted for as a pooling of interests. At the time of the completion, SimpleNet will be a wholly owned subsidiary of broadcast.com.
Broadcast.com and SimpleNet plan to work together to introduce self-service audio and video streaming to SimpleNet's customers. Users will be able to create and broadcast their own personalized audio and video programming, including Internet-only radio and television shows, business presentations, or home movies, which will be accessible within minutes of setting up their service, according to both companies.
"We are pleased to be joining the leading aggregator and broadcaster of streaming media programming on the Web," Robert Bingham, SimpleNet president and CEO, said in a statement. "Through this transaction, we can differentiate SimpleNet's Web hosting services by leveraging broadcast.com's sales and marketing expertise and extending the company's Internet broadcasting services to our client base of over 15,000 consumer and small business accounts in over 100 countries."
SimpleNet provides a selection of Web hosting services to consumers and small businesses. Its customers can select from a menu of options to customize their Web sites, including email and electronic commerce services. According to Media Metrix, SimpleNet is one of the top 20 most trafficked Web sites on the Internet.
Broadcast.com, formerly Audio Net, provides the Webcast technology for many Internet sites. The company helped several news sites deliver video of President Clinton's grand jury testimony which helped boost traffic in September.
"The acquisition of SimpleNet strengthens broadcast.com's position as a leading portal and destination for video and audio on the Web, by giving us access to the consumer and small business markets, two markets with significant growth potential for audio and video streaming," said Mark Cuban, president of broadcast.com in a statement. "By leveraging SimpleNet's worldwide customer base, we hope to deliver the power of Internet broadcasting to people everywhere, from large corporations to individual consumers."
In its first day of trading in July, shares of broadcast.com more than tripled in price, joining a growing list of Internet-related companies whose stocks have soared following their initial public offerings.
Although the company is trading well below its 52-week high of 74, it is well above its low of 32.75. The stock jumped a quarter percent higher in early trading today and was at 50.25.
In recent months, the Webcasting company cut strategic deals to strongly position itself as a leading firm on the Net. Broadcast.com and ESPN.com partnered to deliver audio of college football games. The company also signed a multiyear deal with credit card company First USA to broadcast 10 Forbes business conferences in the next year.