Bell poised to take control of Sympatico
In talks to buy BCT.Telus stake in Web site firm
MARK EVANS
Technology Reporter
Friday, October 1, 1999
Bell Canada is poised to take full control of Sympatico.ca, a move that would give it the freedom to strike a deal with a U.S. Web site to create a North
American electronic commerce and content powerhouse.
Bell is negotiating to purchase BCT.Telus Communications Inc.'s 16.2-per-cent stake in MediaLinx Interactive LP, the company that was set up by several
major telephone companies to own and operate the Sympatico.ca Web site and market the brand name.
The deal is expected to close by the end of the year.
Bell wants to buy BCT.Telus's stake to get the Vancouver-based company out of the picture, so that Bell can quickly make a strategic move with MediaLinx.
Since all transactions involving MediaLinx must currently be approved by all MediaLinx shareholders, the presence of BCT.Telus could thwart Bell's ambitions.
And Mark Schnarr, vice-president of Internet services with BCT.Telus in Vancouver, said it does not make sense for his company and Bell to both own stakes
in Toronto-based MediaLinx, because the two carriers are now competitors since the breakup of the Stentor alliance of phone companies earlier this year.
"One day you're partners and the next day you can become competitors," he said. "We both recognize that, and we are working out a fair price [for MediaLinx]
now."
Although Mr. Schnarr is optimistic that a deal can be completed soon, determining a fair price could be a challenge because Bell and BCT.Telus have to agree on
the value of the Sympatico.ca Web site and the Sympatico brand name.
An analyst suggests that MediaLinx -- with the inclusion of 550,000 Bell Sympatico customers -- could be worth $3-billion to $5-billion.
At face value, that is a lofty valuation, given that the value of an Internet subscriber in Canada has ranged from $300 to $600 apiece, which would make Bell's
Sympatico ISP business worth $165-million to $330-million.
But Brahm Eiley, president of Convergence Consulting Group, said Sympatico's real value lies in Sympatico.ca, which could become a lucrative electronic
commerce and advertising vehicle. Sympatico.ca is the country's most popular site with 70 million pages views a month.
Among the possible routes that Bell could take with Sympatico are a joint venture with a U.S. Web site such as Lycos Inc. or the purchase of a U.S. portal.
Montreal-based BCE Inc., which owns 80 per cent of Bell, has a war chest of more than $5-billion after selling 20 per cent of Bell to Chicago-based Ameritech
Corp. earlier this year.
Sources said Bell has already started to exert more control over MediaLinx by moving several Bell executives into the MediaLinx management ranks and making
a commitment to give MediaLinx more financial clout to grow.
If the deal is completed, MediaLinx will become a unit of Bell Canada's Bell ActiMedia unit.
"Bell understands they have to integrate MediaLinx more with other parts of the company," the source said. "Money and people are a recognition of the
importance of Sympatico as an asset, and Bell is going to drive it much more than they have previously."
Bell owns 75 per cent of MediaLinx, while the other 8.8 per cent is owned by Aliant Inc., a holding company that owns four telephone carriers in Atlantic
Canada. BCE Inc. owns 41.6 per cent of Aliant. |
