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Sony BMG Music Entertainment and Dada form joint venture


NEW YORK | FLORENCE, July 16, 2008 — SONY BMG MUSIC ENTERTAINMENT and Dada, a leading international provider of web and mobile community and entertainment services, today announced the formation of a U.S. joint venture to be known as Dada Entertainment LLC. The mission of the joint venture is to create a leading direct-to-consumer entertainment service with integrated mobile and web offerings. The venture’s products will be marketed through the web and through mobile off-deck and on-deck distribution channels. Dada Entertainment will be 50% owned by Dada USA and 50% owned by SONY BMG MUSIC ENTERTAINMENT.

Through the new joint venture, which will initially target U.S.- based consumers, SONY BMG and Dada intend to offer a next generation web and mobile entertainment service, combining a wide variety of music content, including ringtones, images, video ringers, mobile games, screen themes, and full lengt h audio and video tracks, with a rich Web 2.0 community and social networking experience. The joint venture will include and build upon various direct-to-consumer offerings contributed by the parents, and will be supported by a full portfolio of web-based services designed to foster interaction between users and encourage a sense of community, including photo and video uploading and sharing, dating, blogs, social networking, and user-generated content.

“This joint venture will provide us with an important platform to further expand Artists’ presence in the mobile and web space, give consumers greater flexibility in how they consume music, and build the market for mobile and web entertainment in the U.S.,” commented Thomas Hesse, President, Global Digital Business & U.S. Sales, SONY BMG MUSIC ENTERTAINMENT. “We look forward to working closely with Dada as we set new standards of excellence in off deck and on d eck mobile services, providing the highest quality content, innovative new products, and the best possible levels of customer service."

Dada Entertainment will derive its revenues mainly from subscriptions and pay per download services, as well as from the sale of advertising on its properties, and from innovative community based social advertising solutions, such as Dada’s “friend$” program. This program, based on Google AdSense, allows users to earn money through sharing of advertising revenue generated on their personal spaces and through the community pages containing their content.

“Dada Entertainment will build on the partners' collective experience and strengths in the web and mobile space,” commented Paolo Barberis, Founder and Chairman of Dada.“It will make available to consumers music-related content from a variety of sources with user-friendly, web and m obile interfaces that give end users easy access to the content they want, as well as a chance to interact with each other. We think this new model represents a dynamic step forward for entertainment in the mobile and Web 2.0 era.” .

Dada and SONY BMG will each provide services to support the joint venture. Dada will provide access to its proprietary technology and billing platforms; and SONY BMG will promote the joint venture's services through its multiple distribution channels, including its web properties and video network, CDs, media buying, third-party media and physical retail relationships. Each party will also provide funding to meet the capital needs of the joint venture, and one or more of the entities of the Dada Group will provide the underlying platform and billing technology.

While SONY BMG will provide the joint venture with access to its full catalog of music and video content, Dada Entertai nment will be open to obtaining content from sources other than its current content providers. The joint venture will also be open to evaluating strategic partnerships with other organizations, including media groups and mobile operators.

In fiscal year 2006 the business comprised by the contributed offerings of the two partners recorded net revenues of $66.5 million and Ebitda of $11.5 million. [1]

The JV will be governed by a board of directors comprised of an equal number of representatives of each party. The chairmanship will rotate annually between the parties. Dada has the right to propose the initial CEO of the joint venture, and SONY BMG has the right to propose the initial CFO. The board will designate an audit committee also comprising an equal number of members designated by each party. Certain strategic decisions of the board will require unanimity.

The closing of the transaction, which is e xpected to occur by the fourth quarter of 2008, is subject to satisfaction or waiver of certain customary conditions, including obtaining regulatory approvals and third party consents.

Any developments of the present transaction will be communicated in accordance with applicable regulatory requirements.

The guidance communicated by Dada to the financial community did not take into account the effects of extraordinary activities and any relevant impact of the present transaction on Dada’s financial forecasts will be in such case communicated accordingly.

[1] Dada USA financials based on IFRS, Sony BMG based on US GAAP

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