CBS Confirms Purchase of Last.fm, $280 Million Deal

CBS has now purchased Last.fm for the lofty buyout price of $280 million (141 million pounds), according to information disclosed Wednesday.

The move mints a fresh class of internet millionaires, and underscores the premiums that younger demographics can attract.  The all-cash deal gives CBS access to a userbase that now exceeds 15 million, according to estimates supplied by the London-based startup.  Last.fm first bubbled in 2002, and successfully crafted a model that blends social networking with music, two powerful concepts.  “Last.fm adds a terrific interactive extension to all of our properties and also is a huge step in CBS’ overall strategy of expanding our reach online to transition from a content company into an audience company,” said Les Moonves, president and chief executive of CBS.  According to Moonves, the purchase was driven by a demographic that “plays perfectly to CBS’ goal to attract younger viewers and listeners across our businesses”.

According to the deal structure, Last.fm founders Felix Miller, Martin Stiksel and Richard Jones will continue to run the group independently.  But the trio will also interact with CBS divisions to share their community-oriented, technology-savvy expertise.  Moonves pointed to a quick synergy with CBS Radio, especially given the importance of streaming music within the Last.fm experience.  “CBS Radio has given us a powerful way to create such communities for decades,” Moonves said.  Meanwhile, Miller, Stiksel and Jones will each receive a handsome payout of $38 million (19.2 million pounds), and investors are also reaping rewards.  That includes Index Ventures, which initially plugged $5 million into the play.  Now, Index is enjoying tenfold-plus multiples, thanks to the nosebleed CBS acquisition price.  For CBS, the move is part of a very tricky transition towards user-generated, digital media consumption habits, a shift that has steadily pulled audiences away from more traditional formats.

Story by news analyst Alexandra Osorio.