RealNetworks, MTV To Spin Off Rhapsody

Going Out On Its Own

REALNETWORKS, INC. and MTV NETWORKS announced plans to restructure their digital music service joint venture, RHAPSODY AMERICA LLC, into a newly formed corporation that will operate independently from its parent companies. REALNETWORKS and VIACOM will restructure their ownership and rights in the joint venture to provide the necessary intellectual property rights to launch the new company as an independent entity.

REALNETWORKS will also contribute operating capital as part of the transaction, which is expected to close at the end of the first quarter, but will no longer have operating control over the venture. RHAPSODY will have no single majority owner.

"Separating RHAPSODY into its own independent company is a significant first step in making REALNETWORKS a more focused and profitable company," REALNETWORKS Pres./acting CEO ROBERT KIMBALL said. "RHAPSODY will be the largest pure play digital music service in the market. We have provided RHAPSODY with the right team, and financial and intellectual property assets to succeed in the competitive market for digital music."

Additional information about the deal is available from the Form 8-K filed by REALNETWORKS with the SEC, http://investor.realnetworks.com/sec.cfm

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