LiveXLive Media, Inc. (OTC: LIVX), a streaming music network for live music and video, announced in mid-September that it would acquire Slacker Radio, a streaming music and personalized subscription service for $50 million. The acquisition is the first action by newly-named president, Andy Schuon, a media and entertainment executive. As president, Schuon will oversee all divisions of the company, including LiveXLive, Wantickets, LiveXLive Influencers, and Slacker Radio and Snap Interactive, once the acquisitions are complete.

‘Andy joins us at a perfect time to lead this latest acquisition of Slacker Radio and direct the company overall,’ said Robert Ellin, CEO and chairman of LiveXLive Media, in the September 15 announcement. ‘Andy is an industry visionary with significant experience and deep knowledge of the media and entertainment landscape. He has a long-standing, proven track record of both driving and maintaining growth while achieving excellence and innovation at every level for some of the biggest music brands and media properties in the world. Andy’s unparalleled work in audio and video content is the perfect complement for LiveXLive, Slacker and our other businesses.’

The acquisition will help step up LiveXLive’s efforts to stream entertainment, information and music content. According to the announcement, LiveXLive and Slacker Radio will combine their content teams to create a network of audio and video channels for mobile, TV apps, and in-car ‘infotainment’ systems. Slacker Radio will also introduce LiveXLive to a new audience of music lovers.

Founded in 2003, Slacker Radio utilizes a freemium model to offer both free (ad-supported) and subscription-based access to a song catalog with millions of songs from the three major music companies and a range of independent artists. It also offers hundreds of news, sports and talk radio. Slacker Radio is available on mobile devices, in-car systems, online and on consumer electronics platforms. According to Variety, the subscription service has 1.5 million monthly active users and 400,000 subscribers to the paid and ad-supported tiers.

LiveXLive was founded in 2015. It has live streamed music festivals such as Rock in Rio, Outside Lands Music and Arts Festival, and Hangout Musical Festival, and it has streamed concerts from Metallic, Duran Duran, Katy Perry, Bruce Springsteen and Maroon 5. It uses its online platform and third-party distributors like MTV, Dailymotion and AOL to distribute its live and on-demand content. Last month LiveXLive hoped to launch its LXL App for iOS and Android, and later this year, it will launch its app on Apple TV, Roku and Amazon Fire TV.

Variety reports the deal is worth $50 million to Slacker Radio, with $44 million in cash and $6 million in stock. However, LiveXLive only has $225,000 in revenue for its fiscal year ended March 31, along with losses of $14.2 million, representing a loss of $0.15 per share. As of March 31, the company only had $1.6 million in assets, compared to $5.2 million in assets as of March 31, 2016. As of June 30, 2017, the company had an accumulated deficit of $30.9 million. According to the company’s S-1 SEC filing, LiveXLive will finance the acquisition through a public re-listing which could raise up to $100 million. If that doesn’t happen though, the acquisition could fall through.

‘Our goal is to become a leading destination for premium music video content on the internet by continuing to aggregate and create our content, including through strategic acquisitions,’ said LiveXLive in its SEC filing. ‘We are also building a proprietary engagement platform that we believe will attract and retain users, which we believe will allow us to collect valuable user data and monetize our growing content library through subscriptions, advertising, sponsorships and e-commerce.’

In the SEC filing, LiveXLive said it has a unique opportunity to meet an unmet demand for live music and on-demand performances. The company said that the market for live music events across the globe is $19.6 billion was last year with more than 2,000 festivals. With each event attracting tens of thousands to hundreds of thousands, LiveXLive has the potential to get in front of huge audiences with its branding, products and services.

In terms of monetization, LiveXLive initially plans to earn revenue from content distribution, sponsorships, advertising and e-commerce. Once it has amassed enough premium content, it will add a subscription video on demand and pay-per-view options. The company said when the SVOD service is launched, it will maintain the freemium model with a free tier that is ad-supported.

‘This diversified user base will make it easier for us to generate substantial revenue from multiple streams. These revenue streams should be sufficient to pay for the total costs of operations, including production, rights, marketing, administrative and travel,’ the company said.

LiveXLive is also in the process of acquiring Snap Interactive, Inc., better known as Snapchat, for $34.0 million, comprised of $20.4 million in cash and $13.6 million in common stock. According to the SEC filing, as of June 30, 2017, Snap had approximately 179,000 premium subscribers and 45,000 new users joining each day in June. Snap earns revenue from subscriptions, virtual gifts, micropayments, and advertising revenue.

Insider Take:

The biggest risks with both deals are LiveXLive’s limited operating history, its significant financial losses and its lack of capital. While LiveXLive does, indeed, have some unique competitive advantages and opportunities here, it is banking on the success of relisting the company to acquire Snap and Slacker Radio. There are a lot of ‘ifs’ here and a short track record. It will be interesting to see how these acquisitions unfold and if they go through.