Many cos prefer buying a Web presence to building it
PALO ALTO, Calif., May 17 (Reuters) - Companies spent $12.9
billion on acquisitions of Internet media businesses during the
first quarter of 1998, suggesting that many are opting to buy a
Web presence rather than build one, a new study shows.
Some 45 Internet businesses were purchased during the first
quarter, compared with 17 in the comparable year-ago period,
according to the study by the San Francisco consulting firm New
Media Resources. The value of these deals grew at an even
faster pace, totaling $12.9 billion in the 1999 first quarter,
or 32 times the $250 million in last year's first quarter.
Put another way, companies spent more money on Web media
properties in the first month of 1999 -- $11.5 billion -- than
during all of 1998, when spending totaled $6 billion.
Big Internet acquisitions this year included AtHome Corp's
<ATHM.O> $6.7 billion purchase of the portal business Excite
<XCIT.O>, and Yahoo Inc's <YHOO.O> $4.6 billion deal to buy the
online community Geocities. More recently, Yahoo has also
agreed to buy the online video company Broadcast.com Inc
<BCST.O> in a deal for $5.7 billion.
All of these deals were completed as stock transactions, in
which the buyer used its high-priced shares as currency.
"The dramatic surge in M&A activity indicates that Internet
companies are increasingly voting to buy, rather than build,
their Web positions," said Tim Miller, President of New Media
Resources.
"The time and energy involved to recruit and organize a
team to build a Web property is so great that a company is
almost certain to fall behind if it takes the build route."
Most of the acquisitions were made by big companies like
Yahoo and Microsoft Corp <MSFT.O>, that already have an
extensive Web presence but wanted to add new services to their
existing franchises, the study said.
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