Viacom and Liberty Media say they have agreed to an Internet music alliance in which Liberty's TCI Music unit will buy a 10 percent stake in a new MTV online unit.
The companies today said Liberty's TCI Music unit will buy a 10 percent stake in a new MTV online division.
In return, Viacom's MTV will acquire The Box, a customer request music cable service considered a threat to the MTV music empire, as well as three online music sites, the companies said.
Specific financial terms of the deal were not disclosed, but MTV chief executive Tom Freston said no cash was exchanging hands.
MTV and TCI Music said they plan to create an interactive commerce-oriented music channel for digital set-top boxes expected to be available from cable operators in late 1999.
Convergence is the key to this deal, Freston said. "Of all the people out there in the music space, we're the most uniquely positioned," he said.
As of yet, MTV said the two companies have not said anything about working with any specific technology partners on the interactive music channel for set-tops. According to MTV, Liberty already is developing similar channels on other topics, such as travel and health.
Among the Web sites to be acquired from Liberty by MTV Networks Online is SonicNet, which provides music news and online concerts and is considered to be one of the more established and popular music Web sites.
"We see ourselves with Liberty now acquiring other companies and striking deals with other companies," Freston said. More specifically, Freston said that he sees deals and acquisitions coming in areas of content, e-commerce, community, and ticket/concert information and purchasing. Freston declined to name any specific companies.
This weekend is MTV's "Cool Crap" weekend. "We'll be driving people to eBay...For us, it's kind of a first adventure into a converged world, but it's just one more thing that shows the utility of the Internet and how TV and the Internet relate," he added.
Freston also said Viacom is planning to spin off two of its interactive properties and take them public. He said one company will be responsible for Viacom's online music venture; the other will operate its children's online venture. He said both IPOs are expected to take place in 9 to 15 months.
The music company will operate Viacom's upcoming music hub site, code-named the "Buggles Project," which is scheduled to launch June 15, a Viacom spokeswoman said. The site will be renamed next week; the company is still finalizing the transfer of the domain name from its current owner, Freston said.
The other company will operate "Project Nozzle," which is the code name for a children's hub site Viacom plans to launch in September.
Separately, Liberty Media also set a 2-for-1 stock split of its common stock to be effected in the form of a stock dividend. The company said in a statement that shareholders of record on May 28, 1999, will be entitled to the split to be distributed on or after June 11.
News.com's Beth Lipton and Reuters contributed to this report.