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To: Michael Olds who wrote (9033)	6/7/1999 7:48:00 PM
From: Ed Perry	Respond to of 17679

An interesting window on Disney's Internet portfolio: From the NY Times June 7, 1999 Disney Said to Consider Web Spinoff By GERALDINE FABRIKANT The Walt Disney Co. is considering a spinoff of its Internet-related operations, several people close to the discussions said Sunday. The details of any plan were not clear, but Disney has stakes in several Internet businesses that could become part of any spinoff. A Disney spokesman declined to comment. Still, analysts say that Disney is under pressure to raise its sagging stock price, which has been hurt recently by weak earnings from its television and film operations. For the second quarter, Disney said its profit fell 30 percent because of weaker home video and merchandising sales and higher costs at ABC. Despite those figures, shares of Disney rose $1.625, or 5.6 percent, on Friday, to $30.625, amid reports that Disney might either spin off some of its Internet operations or possibly buy back some stock. Disney's stock had been as high as $40.313 last July and had fallen to $22.50 by October. A year ago, Disney acquired 43 percent of the Infoseek Corp., a service that helps guide users on the World Wide Web, in a deal valued at $900 million. Disney put up $90 million in cash and its ownership of Starwave, a company that creates elaborate Web sites. Disney had previously acquired Starwave in several phases from Paul Allen, the co-founder of Microsoft. The company's biggest venture is the sports site it operates on behalf of ESPN. Several of Disney's other businesses, including ABC, ABC News and Disney itself, have established Web sites, and one analyst calculated Sunday that Disney might swap those assets into Infoseek in exchange for a larger stake in the company. Infoseek executives could not be reached for comment yesterday. Disney already has the right to raise its stake in Infoseek to as much as 50.1 percent as part of an agreement to lend Infoseek up to $139 million over the first five years of the deal. Infoseek and Disney have also created the Go Network, Disney's answer to Yahoo, and other portals to the Internet. Disney could theoretically spin off some of its assets into a tracking stock, where underlying assets are owned by the parent company but the stock itself is publicly traded. But a spinoff might not be met as favorably on Wall Street as a stock buyback because Internet stocks have weakened and new offerings have lost some of their allure. Ed Perry