The Walt Disney Company and Infoseek
Corporation to Combine Disney's Buena
Vista Internet Group With Infoseek and
Create Single Internet Business Called
go.com
marketwatch.newsalert.com
Business Wire - July 12, 1999 06:15
NEW YORK--(BUSINESS WIRE)--July 12, 1999--
New class of common stock to be issued to track performance
of combined enterprise
The Walt Disney Company (NYSE:DIS) has reached an agreement with
Infoseek Corporation (Nasdaq:SEEK) to combine its Buena Vista
Internet Group (BVIG) with Infoseek and create a single Internet
business called go.com. A new class of common stock, which is
expected to be traded on the New York Stock Exchange under the ticker
symbol GO, will be issued to track the performance of the combined
enterprise.
The announcement was made today by Michael D. Eisner, chairman and
CEO of The Walt Disney Company, and Harry Motro, president and
CEO of Infoseek. It follows unanimous approval of the transaction by the
Disney Board of Directors and the non-Disney members of the Infoseek
Board of Directors.
In the merger, Infoseek shareholders will receive 1.15 shares of go.com
for each of their Infoseek shares. Given Disney's current approximate 42
percent ownership of Infoseek and contribution of 52.5 percent of the
assets to the combined enterprise, Disney will have approximately a 72
percent retained interest in go.com following the merger. The
transaction, which requires approvals by Disney shareholders and
non-Disney Infoseek shareholders, is expected to close by the end of the
calendar year.
"Combining Disney's Internet assets with Infoseek takes our online
strategy to the next level and reaffirms The Walt Disney Company's
commitment to maintaining a leadership position on the Internet," Eisner
said. "go.com will unlock the value and potential of our combined
Internet assets and position them to ignite the marketplace with new
products and services reaching millions of current and new users around
the world."
"The unmatched combination of the Disney and Infoseek Internet assets
will create value for shareholders of both companies," Motro said.
"go.com will have the benefit of a management and operational structure
that can leverage the strength of The Walt Disney Company while
retaining the operating flexibility required for Internet success. I know of
no other Internet company that will be better positioned for success than
go.com," he added.
"This represents an important and historic strategic move for The Walt
Disney Company," said Roy E. Disney, vice chairman. "It is consistent
with the bold and visionary thinking that Disney has used to embrace
new technology and media throughout its history."
The combined businesses are expected to generate approximately $350
million in revenues for the current fiscal year, on a pro forma basis. Of
this total, approximately $200 million represents Internet-related
revenue, with the balance of the revenue coming from the Disney
Catalog. Inclusion of the catalog will provide product sourcing,
fulfillment and customer service infrastructure to support go.com's
growth in online commerce.
The Disney assets being contributed to go.com include Disney.com,
Disney's Club Blast, The Disney Store Online, Disney Travel Online,
Disney.com's international sites, Family.com, ABC.com, Oscar.com and
ABCSports.com. Additional assets include a range of new web
initiatives Disney is developing, such as: Family travel, Family
shopping and Disney auctions. Disney also is contributing its share of
the 10-year joint ventures it currently holds with Infoseek: ABC News
Internet Ventures, which includes ABCNEWS.com, Mr. Showbiz and
Wall of Sound; and ESPN Internet Ventures, which includes ESPN.com,
NFL.com, NBA.com, WNBA.com, NASCAR.com and The ESPN Store
Online. Disney will also extend the terms of these 10-year ventures to 99
years.
go.com will continue to benefit from Disney's extensive media
promotion platform, including the ABC Television Network, ABC
Radio Network, numerous cable properties such as ESPN and Disney
Channel, the Disney theme parks and resorts and other Disney media
properties. The new business also will have the advantage of Disney's
strong balance sheet and lower cost of capital.
"Disney's Internet business, like the Internet itself, is only beginning to
realize its potential," said Thomas O. Staggs, executive vice president
and chief financial officer of Disney, who has been one of the chief
architects of Disney's Internet strategy since its inception.
Although Disney's first serious Internet initiatives began only in 1995,
Staggs noted that the company already has created and assembled a wide
variety of sports, news, entertainment and family content sites that are
leaders in their respective categories. With Infoseek, it also launched the
go.com portal, which combined Infoseek's user reach, services and
unrivaled Internet search engine with Disney's global brand awareness.
"Now, combining the businesses under go.com should enable us to move
the business more nimbly and effectively," Staggs added.
The new structure will integrate management, align interests and
eliminate operational redundancies, making it easier to pursue initiatives
such as electronic commerce, international expansion, broadband,
third-party partnerships and cross-network sponsorship opportunities
that will increase the overall strength of the go.com portal. In addition,
the tracking stock structure maintains an Internet-based currency for
potential future strategic acquisitions.
"We believe that our unique network concept, which will integrate deep,
rich sites with a broad range of content and services, has the highest
potential for creating sustained user traffic and revenue growth," said
Steve Wadsworth, president of BVIG.
Motro will continue as president and CEO of Infoseek until closing of
the deal and through a transition period, at which point he has chosen to
leave.
"I believe in this deal and in go.com's enormous potential for category
leadership," Motro said. "As I've had the chance to reflect on Infoseek's
tremendous accomplishments and growth, it has become clear that this is
a perfect opportunity for me to take some time off."
"Harry was instrumental in the creation and launch of the GO network
and recognized the value of combining traditional media assets with the
Internet," Eisner said. "We are grateful to Harry for his leadership since
the formation of GO Network and look forward to his guidance during
the transition period."
Staggs will lead an executive team that will manage the transition until
closing. Key team members from BVIG include Wadsworth; Chuck
Davis, president, e-commerce; Kevin Mayer, executive vice president,
television network product and international; and Larry Shapiro,
executive vice president, business development and operations. Team
members from Infoseek will include Patrick Naughton, executive vice
president, products; and Beth Haggerty, senior vice president,
advertising sales and sponsorships.
Infoseek Corporation is the home of GO Network (www.go.com), one of
the top five sites on the Internet, according to Media Metrix. In addition,
Infoseek licenses its Ultraseek Server search and navigation software to
companies for their own intranet, extranet and Internet sites. Infoseek is
headquartered in Sunnyvale, Calif.
Disney's Buena Vista Internet Group is responsible for creating and
operating a broad array of family, entertainment, news and sports Web
sites, including Disney.com, the top-ranking kids and family site;
Family.com, the Web's premiere parenting resource; ABC.com, the
number one TV network Web site; ABCNEWS.com, the fastest growing
news site online; and ESPN.com, the Web's most popular sports site.
Other popular BVIG Web offerings include The Disney Store Online, the
Disney Travel Web site, the ESPN Store Online, the official league sites
of the NFL, NBA, NASCAR, WNBA, Mr. Showbiz and Wall of Sound.
Disney and Infoseek management believe certain statements in this press
release may constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements include but are not limited to those with respect to the
potential for the combined Internet assets to offer new products and
services, generate an expanded user base and leverage operational
efficiencies, as well as the expected revenues and revenue growth of the
combined business. These statements are made on the basis of
management's views and assumptions regarding future events and
business performance as of the time the statements are made. Actual
results may differ materially from those expressed or implied. Such
differences may result from the ability of the combined business to
successfully develop and introduce new products and services in a
competitive Internet marketplace and the ability of the companies to
combine their Internet operations effectively, as well as from
developments beyond the control of either company, including
technological developments and changes in the economic conditions that
may affect the performance of Internet operations. In addition, changes in
competitive conditions and regulatory developments may affect future
business performance, and changing market conditions may affect the
valuation of Internet-related securities. |
