Stingray scores AT&T music-streaming deal, targets DirecTV

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Canada's unlikely global media company, Stingray Digital Group, has struck a key deal south of the border to bring its specialty – background music – to the masses of America.

Montreal-based Stingray, which offers continuous streaming music, video, concert and karaoke channels to more than 110 million cable-TV viewers in 113 countries, is set to announce Tuesday that U.S. telecom giant AT&T Inc. will offer more than 100 of its specialized music and video channels to its six-million Internet-TV customers. The deal is worth about $20-million to Stingray over a three- to five-year period.

Stingray chief executive officer Eric Boyko said the deal will roughly double Stingray's share of revenues coming from the U.S. to about 20 per cent, and give it a long-sought launch pad into the market, six years after he first approached AT&T. His next target is DirecTV, the digital TV company with 20 million U.S. subscribers that is set to merge with AT&T. Mr. Boyko said in a phone interview that "we're going to be contacting DirecTV" as soon as the AT&T-Stingray deal is announced. "I think a deal with DirecTV will be achieved."

Mel Coker, chief marketing officer at AT&T Home Solutions, said in a statement that Stingray "is a perfect fit for our extensive list of interactive apps."

Stingray has also had its eyes on larger U.S. rival Music Choice, owned by a consortium of cable, music and technology companies, and tried unsuccessfully to buy it last year. Now, it is instead picking off some of its accounts, including AT&T, said Stingray chairman François-Charles Sirois. "I think we're in a very good position to just grow and not have to worry about buying them," Mr. Sirois said.

Mr. Boyko, backed by two of Montreal's top private equity firms – including Telesystem, controlled by Mr. Sirois' father, billionaire Charles Sirois – has built privately held Stingray into a unique Canadian-based media company, specialized in pumping in low-cost programmed music and related content to 350 cable providers around the world. The company also supplies background music to 70,000 stores across Canada and offers an app so its cable partners can offer the same channels to customers on their mobile devices.

The company, with close to $100-million in annual revenues, has been built through 23 acquisitions since its founding in 2007 and has about 200 employees, with close to half employed as programmers.

A Canadian media analyst who asked not to be identified said Stingray benefits from "unique positioning,"whereby it spends little on production, isn't subject to the same expensive fight for exclusive content like other cable TV channel operators and isn't as encumbered by regulatory constraints. "The company can leverage its asset internationally" by adding millions of subscribers without having to invest significantly in its digital platform, enabling it to benefit from scale, the analyst said.

Despite a push by some music streaming services to offer customizable channels, Mr. Boyko maintains that the vast majority of people prefer to have music selected for them. "You will always have the 5 per cent of people who are music aficionados who are crazy and want to pick all their songs. That's not our market. We cater to the other 95 per cent," he said. Mr. Boyko said his goal is to build Stingray into "a major media company … the next Shaw or Rogers." He said he's also looking to snap up smaller digital cable music channel providers in emerging markets around the world.