CMGI to put $100 million in Webcaster
Start-up Web broadcaster to compete with Broadcast.com
By Stephanie O'Brien, CBS MarketWatch
Last Update: 5:22 PM ET Feb 17, 1999
Movers & Shakers
Internet Stocks
ANDOVER, Mass. (CBS.MW) -- CMGI, a backer of Internet
companies and related technology, said it plans to invest $100 million to
build and launch an Internet broadcast company.
Neil Braun, a former president of NBC television
will head the new company. It will deliver live audio
and video over the Internet and is expected to
incorporate existing CMGI (CMGI) assets, as well
as outside interests, the company said.
It will make use of CMGI subsidiary Magnitude
Network, Raymond James analyst Phil Leigh said.
Magnitude Network, a Chicago-based systems
and service organization that integrates Internet
technologies into local broadcast markets," will be
the nucleus around which (Braun) will build the new
business," Leigh said.
Magnitude Network provides affiliates with e-commerce platforms. The
objective is "to put eyeballs on the ears of radio and extend stations'
brand equity," CMGI says on its Web site
CMGI didn't specify what role Magnitude
Network might play in the new venture.
The start-up, with its base in New York, will launch
with an initial investment of more than $100 million.
It's expected to begin operating in the second
quarter, CMGI said.
In an interview, Braun said he "wants to help create
the most-usable and most-used portal on the
Internet."
Braun declined to elaborate on the potential role
Magnitude Network will play or provide other
specifics on how the company will achieve that
goal.
"That's the stay-tuned part," Braun said. He added
that the new venture "won't repeat what's already
being done."
Analysts said the new concern will compete with Dallas-based
Broadcast.com (BCST), which through its Web site provides Internet
users access to a variety of programming, including live music, sports
broadcasts, radio, and local and cable television shows.
CMGI shares fell 1 1/16 to 97 15/16. Shares of Broadcast.com fell 3 1/4
to 58 3/16.
"They'll be able to replicate and mutate the Broadcast.com model,"
Raymond James' Leigh said of the new venture. The new company will
have twice the seed money of Broadcast.com, he noted.
Broadcast.com has a $2 billion market capitalization and total invested
capital of $60 million, Leigh said. This compares to the $100 million
CMGI is putting toward the new venture.
"That's pretty significant. Right there that's considerably more than the
industry leader," Leigh said.
Still, he said, he is bullish on both companies whom he rates a "buy."
"There's always room for a Hertz and an Avis," Leigh said.
"We are excited to see what they plan to do," Broadcast.com president
Mark Cuban told CBS Marketwatch.com. "Anything that makes more
people comfortable and experienced with Internet broadcasting is a great
thing for Broadcast.com and opens up doors for us," he said.
On Tuesday, CMGI said it named Jeff Cunningham, former group
publisher of Forbes, as president and CEO of Planet Direct, a Web
portal. Planet Direct, another majority-owned subsidiary of CMGI, is a
personal Web service that tailors members' online experience to their
interests and local community. The service provides consumers with news,
weather and financial data and promises easy access to personal interests
in a community atmosphere.
Andover, Mass.-based CMGI combines operating companies with
strategic venture investments. Microsoft, Intel and Sumitomo own minority
stakes in CMGI.
The company's Internet Group includes its majority-owned subsidiary
companies ADSmart, Engage Technologies, NaviSite, NaviNet, Planet
Direct, Magnitude Network and ZineZone.
The company's CMG@Ventures affiliates have ownership interests in
Lycos and GeoCities (GCTY) among others.
CMGI owns about 9.5 million, or 20 percent, of Lycos (LCOS), the
Web's third-largest search engine, which last week announced a merger
deal with USA Networks (USAI). See related story. |
