BIG NEWS TOMMOROW
AtHome to buy Excite — sources say
By Emory Thomas Jr.,
David Bowermaster, Bob Sullivan
MSNBC
Jan. 18 — AtHome Corp. is set to announce as
early as Tuesday that it has agreed to acquire
Excite Corp., sources tell MSNBC. Terms of the
deal, which was confirmed by an individual close
to the AtHome board of directors, were not
immediately available, but based on Excite's
share price ($67 1/2), the market value of the
company is about $3.5 billion.
At Home Corporation
(ATHM)
price
change
$102.00
-0.625
Excite, Inc. (XCIT)
price
change
$67.50
+2.375
Data: Microsoft Investor and S&P
Comstock 20 min.delay
ATHOME DECLINED to confirm or deny the
transaction. “I can't comment on any rumor or speculation,”
said Matt Wolfrom, a spokesman for AtHome, which
provides high-speed Internet access via cable TV lines.
Excite, the Internet's second largest portal company
behind Yahoo!, would provide AtHome with a far fuller
range of online services than it now offers on its own. By
combining forces, the two companies would be better able
to compete head-on with America Online in the rapidly
evolving high-speed-Internet, or “broadband,” sphere.
“Clearly AtHome is trying to position itself as the next
AOL for the broadband space,” says Michael Harris,
president of Kinetic Strategies Inc., a consulting firm.
AtHome, controlled by TeleCommunications Inc., as
well as Cox Communications, Comcast Corp. and several
other investors, has snared some 330,000 subscribers to its
service in North America to date.
That's a paltry number compared to the likes of
America Online and its roughly 14 million subscribers, but
industry executives and analysts believe high-speed Internet
access will proliferate rapidly. What's more, AtHome's
close affiliation with many different cable companies gives it
a leg up in increasing its base of subscribers, and potentially
challenging AOL's grip on the online market.
AOL's increasing interest in the broadband arena was
evident last week when the company announced an alliance
with Bell Atlantic, which will offer AOL's service over
high-speed digital subscriber line, or DSL, technology. The
high-speed version of AOL — which will allow quicker
Web page downloads, more accessible video clips and
other services — will cost roughly $40 a month, or about
twice as much as the current monthly fee. (AtHome's
monthly service fee is priced in the same range.)
Though not a party to the transaction, communications
giant AT&T figures prominently in the deal. If its proposed
merger with TCI goes through as expected, the long
distance giant will take a controlling interest in AtHome.
(TCI currently holds about 40 percent of AtHome shares
but over 70 percent of the controlling votes.)
AT&T chief executive C. Michael Armstrong has
previously stated that he plans to use AtHome as a conduit
for delivering a whole range of communications services,
from electronic commerce to Internet telephony.
That's a fearsome prospect in the eyes of many
Internet service providers. In fact, AOL and other providers
are lobbying regulators to gain access to TCI's cable lines in
order to offer their services over valuable broadband
connections. Under the current scenario, AtHome would be
the default broadband service provider for all TCI
subscribers.
For Excite, operating in the hefty shadow of rival
Yahoo!, a merger could provide a new and potent avenue
for increasing its share of the online audience. In a recent
Media Metrix ranking, Excite was the sixth most-visited site
on the Internet, with a 20 percent reach — about half that
of Yahoo!
AtHome's stock price has risen 292 percent over the
past 12 months, putting the company in a strong position to
pursue deals.
“With AtHome's existing stock valuation, it's been
suprising that they haven't done more deals,” said Harris.
“They've certainly got a huge war chest built up.”
In addition to their business synergies, AtHome and
Excite are also neighbors. The two companies'
headquarters are a stone's throw apart in Redwood City,
Calif., just north of San Jose. They also both received early
funding from partners at venture-capital powerhouse
Kleiner Perkins Caufield & Byers. |
