Took me a long time to find the artilce, but here it is.
Is Lycos next in line for major media partnership?
Reuters Story - January 21, 1999 18:19
By Andrea Orr
PALO ALTO, Calif., Jan 21 (Reuters) - Just one year ago, when the Internet was still widely
viewed as a fringe media, it was possible to count the really big online content providers on one
hand. Their names were Yahoo , Excite , Infoseek and Lycos .
Now that Excite is being acquired in a deal valued at more than $6 billion, Infoseek has
partnered with Walt Disney Co and is enjoying a Disney-style marketing blitz, and Yahoo has
solidified its position as the undisputed leader in the field, is it only a matter of time before
Lycos teams up with a media giant?
Speculation has been swirling around Waltham, Mass.-based Lycos since the AtHome Corp
purchase of Excite Inc was announced earlier this week. Lycos, a fast-growing Internet service
that is visited by close to half of all Internet users in a given month, inadvertently fueled the talk
Wednesday when it said it was "in discussions with potential partners."
The Financial Times also reported that Lycos was seeking a media or telecommunications
business to become a strategic partner by buying up to a 20 percent stake in the company.
And on Thursday, when some downward gravity finally hit most of the high-flying Internet
stocks, Lycos continued its ascent, rising more than $12 to $117 a share. The stock began 1999 at
less than half that price.
But Lycos Chief Executive Bob Davis tried to quell the rumors Thursday by issuing a statement
saying, "We are an independent company committed to continuing our rapid growth and
expanding our broad-based consumer offering."
Davis said Lycos has "conducted hundreds of discussions and consummated dozens of
relationships with companies across a broad spectrum." His remarks appeared to suggest that any
new partnerships the company explored could be small deals with other online content
providers, rather than the sort of mega-deal investors are anticipating.
Still, the rumors were hard to dismiss. Analysts say that with every new acquisition or
partnership between an Internet business and a big media player, stand-alone companies like
Lycos become hotter properties.
"Folks (like Lycos) with large audiences are strategically valuable to big media and big telecom
and big technology companies," said one analyst who asked not to be named.
"With that in mind you'd come up with the conclusion that they'd find a partner.... The list of
possible partners is as long as the list of people who haven't yet done (Internet) deals."
Names commonly believed to to be at the top of that list include Time Warner Inc and CBS Corp
. "They've got to be considering (an Internet alliance)," said William Blair & Co analyst
Abhishek Gami.
Both companies have some online properties but have not yet formed a major Internet venture of
the sort that Disney formed with Infoseek, or General Electric Co's NBC has built through its
partnership with Microsoft Corp and its investment in the online technology site, Cnet Inc .
German media giant Bertelsmann AG , which already has a European joint venture with Lycos,
was also rumored to be considering investing as much as $1 billion in the company. A
Bertelsmann spokeswoman said she knew nothing of such talks.
Analysts are also not ruling out other high-tech or Internet leaders such as Microsoft or America
Online Inc . Although Microsoft has its own online service, it has not been as successful as some
stand-alone sites in building a large, loyal audience. The company had been reported to be
considering a purchase of Excite, before the AtHome deal was sealed.
Hambrecht and Quist analyst Paul Noglows said even the biggest Internet businesses face the
continuing challenge to attract more "eyeballs," and aligning with established leaders is often
easier than building their own brand.
"Building a Web presence is much harder than anyone gives it credit for," he said. "And Lycos
has put together a highly-trafficked collection of sites."
((Andrea Orr, Palo Alto bureau (650) 846-5400))
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