• by Gavin O'Malley  @mp_gavin, February 28, 2007

Setting its sights on bandwidth-efficient, cost-effective peer-to-peer distribution, broadband services company Roo Group has agreed to buy legal P2P service provider Wurld Media's assets for up to $10 million in cash and stock.

The announcement comes on the heels of a report by Adams Media Research, which projects significant increases in consumer spending on downloaded movies, music and TV shows. The report projects that pay-to-play spending will top $4 billion in 2011, far exceeding revenues derived from video advertising.

The deal will give Roo's existing clients--including News Corp., Verizon and The Street.com--access to this burgeoning pay-to-play market, according to Roo CEO Robert Petty.

"The acquisition of the technology and solutions from Wurld Media will enable our existing and future clients to engage their audiences at every digital touchpoint including online, mobile and IPTV," Petty said.

Founded in 1999, Wurld Media has forged deals with major record labels--Universal, Sony, EMI, Fox Music--and other digital content owners. In late 2005, NBC Universal struck a deal to distribute full-length movies through Wurld Media's peer-to-peer file-sharing service Peer Impact. Through the service, NBCU now offers consumers 24-hour access to new and archived films for a fee.

The deal, expected to close within four months, is also expected to boost Roo's social networking, e-commerce and digital rights management offerings.

Roo has established itself as a company to watch in the nascent broadband industry. Last month, News Corp. agreed to purchase a 5% stake in the company, and will potentially take another 5% in the near term.

Currently, Roo has powered video distribution and syndication across News Corp.'s properties, including The Times of London and The Australian. Roo also has content syndication partnerships with Fox News Channel and Sky News.

Under the terms of the deal, Roo will immediately advance $1.5 million to Wurld Media, and upon the closing of the acquisition, Roo will pay $6.5 million dollars in stock or cash. Roo will agree to issue an additional $2 million in Roo stock upon the achievement of specific performance milestones.