we have movement finally in the postive direction on news about the deal.
03/09 07:30 *CMGI<CMGI.O> CEO SAYS LYCOS DISPUTE OVER DEAL TERMS, NOT USA
NETWORKS LINK
By Eric Auchard
NEW YORK, March 9 (Reuters) - CMGI Inc. <CMGI.O> Chief Executive David Wetherell on Tuesday said he resigned from the Lycos Inc.<LCOS.O> board in order to agitate for better terms on Lycos' proposed merger with USA Networks Inc. <USAI.O>
In a phone interview, Wetherell, an original member of the Lycos board, said his departure from the board will allow him to solicit other Lycos shareholders to press for a higher price for the sale of Lycos or -- barring that -- to block the sale.
Wetherell, who heads Internet venture fund CMGI -- the largest Lycos stakeholder with 18.5 percent -- said his company had hired investment banker Morgan Stanley to canvass other shareholders to press for changes on the Lycos merger.
He is challenging the proposed deal announced one month ago that would put television executive Barry Diller in control of a potential new media and electronic commerce powerhouse combining Lycos and Diller's USA Networks Inc.
The proposed merger has led to a nearly 40 percent decline in the value of Lycos stock amid market confusion and disappointment at the deal's terms, which many analysts see as favoring USA Network holders.
"Lycos is worth a good deal more than its value today," Wetherell told Reuters in an interview Tuesday. "I do believe that the present economics just don't work," he said.
Lycos stock traded at $83.33 Monday on the Nasdaq stock market, down from $137 before the deal was announced. Still, the CMGI executive left open the possibility he might once again support the merger -- but only on more favorable terms for Lycos shareholders.
"I still believe the pieces of the deal make a lot of sense -- its the economics that don't," Wetherell said.
The new company, to be called USA/Lycos Interactive Networks Inc., would combine Lycos, a top Internet destination, with USA Networks' Home Shopping Network TV and Internet Shopping Network/First Auction units and USA's majority interest in Ticketmaster Online/CitySearch Inc. <TMCS.O>
Wetherell said that the sharp fall in the value of Lycos stock had made the terms of the deal dilutive to Lycos and Ticketmaster shareholders.
Wetherell -- who is seen as one of the Internet's shrewdest investors, having backed Lycos, GeoCities <GCTY.O> and dozens of other promising Internet ventures -- said if Lycos fails to receive a better price, he will advocate Lycos go it alone as an independent firm or seek another traditional media partner.
"Lycos is the last kingmaker today," Wetherell said of the company's powerful position on the Internet, noting that 48 percent of Internet users pass through its network of electronic media, commerce and communication sites each month.
CMGI was an original financial backer of Lycos, and controlled a majority stake in Lycos until November 1997. Ahead of his resignation, CMGI stock surged $47.50, or 31 percent on Monday, to a new record high of $199.69. CMGI is one of only a handful of Internet stocks now trading at record highs.
In a statement, Lycos confirmed that Wetherell had resigned from its board but said it remained committed to its merger with USA Networks companies.
A spokesman for USA Networks did not immediately return calls seeking comment on Wetherell's actions. But in recent appearances, Diller has said he is not giving any consideration to renegotiating his company's deal with Lycos.
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