Sony to sell its Gracenote audio-recognition software business to Tribune Co for $170 million

December 26, 2013 Leave a comment

Sony to Sell Gracenote Business to Tribune for $170 Million

Sony Corp. (6758) agreed to sell its Gracenote audio-recognition software business to Tribune Co. (TRBAA) for $170 million, part of the consumer-electronics maker’s effort to shed units as it focuses on fewer products.Tribune will combine Gracenote with its media-services division, which provides digital data on TV shows and movies, the Chicago-based broadcasting and publishing company said today in a statement. Sony acquired Gracenote in 2008 for about $260 million. The unit has annual sales of $100 million to $200 million, a person with knowledge of the business said last week.

Gracenote is best known for providing the software that lets Apple Inc. (AAPL)’s iTunes quickly identify songs when a user transfers tracks to a computer from a compact disc. The business has expanded to power many smartphone music applications that compete with Shazam Entertainment Ltd.’s song-recognition service. Gracenote also is integrating its software into televisions so marketers can learn what a person is watching and target ads based on demographics.

“Together we will become an even greater force in the global entertainment data business,” Shashi Seth, president of Tribune Digital Ventures, said in the statement.

Tribune, publisher of the Los Angeles Times, Chicago Tribune and Baltimore Sun and owner or operator of dozens of television stations, earlier this year announced plans to spin off its newspapers into a separate business. Its Tribune Media Services division collects and sells entertainment data.

Streamlining Sony

The sale will result in a gain of about $60 million to Sony’s operating income, and is projected to be completed before the end of March, the company said in a separate statement.

Sony Chief Executive Officer Kazuo Hirai is attempting to turn around the struggling Japanese consumer-electronics company by unifying its sprawling businesses, reducing costs and streamlining operations.

The company has largely missed the transition to mobile computing dominated by Apple, Samsung Electronics Co. (005930) and Google Inc. Sony posted a surprise quarterly loss in October and lowered its forecast for TVs, cameras and computers, and last month said it plans $250 million in cuts at its entertainment division that operates movie and television studios.

Audio Database

Gracenote had operated mostly autonomously since it was acquired, and its software is included in products made by many Sony competitors, including Toshiba Corp. (6502) and Microsoft Corp. The unit keeps a database of audio from songs, television shows and other content, helping gadgets like smartphones, televisions and tablets identify what is playing and, based on the genre, perform tasks such as recommending another song to play or show to watch. Amazon.com Inc. and Viacom Inc. (VIAB)’s MTV also use Gracenote’s technology.

Emeryville, California-based Gracenote has been trying to expand its business into the advertising market. It has introduced software that lets TV programmers and marketers recognize what a person is watching, then customize what TV ads are seen based on demographic information and viewing history. For instance, an automobile company could target ads only toward households that can afford a certain new car.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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