SONICblue Sounds Off with Two Digital Media Buys

SONICblue Inc. Thursday made noise in the digital entertainment sector when
it grabbed two firms for almost a combined $50 million in stock.

The digital media firm, which has its hands in Rio players, HomeFree
networking solutions and other appliances, acquired privately-owned ReplayTV
Inc. for 16 million shares. At the current SONICblue offering of $7.34 a
share, the deal would be worth about $43 million.

ReplayTV’s specialty is developing software for entertainment products and
selling it to consumer electronics manufacturers, PC manufacturers, set-top
box manufacturers and cable and satellite operators.

As a complementary buy, ReplayTV picked up Sensory Science (the firm
formerly known as Go-Video) for $8 million in stock.

Sensory Science, which makes the kind of entertainment products for which
ReplayTV develops software, develops
and media players and DVD players, including Go-Video digital consumer
products, California Audio Labs products and Rave branded MP3 players.

Ken Potashner, chief executive officer and chairman of SONICblue, said the
timing was ripe for the ReplayTV deal because “we have established the
leadership position in digital audio with our Rio brand.”

Going forward, Potashner said his company’s intent is to partner with
leading content distributors.

As for the Sensory Science deal, Potashner said it would expand SONICblue’s
retail channel by adding digital video strength to its established audio
technology.

But that’s looking forward. Where SONICblue has come from is a bit darker — the firm has just extricated itself from the graphics chip and board businesses and fired 400 workers to realign its business model as a digital media expert.