CAN THE MOUSE BUILD ANOTHER MAGIC KINGDOM?
Infoseek- a nice portal company, but what a boring academic name.
The Walt Disney Company- one of the world's largest media companies, desperately seeking to become more than a mere Internet stepchild.
Something had to give.
Enter the solution. Disney purchases 43% of Infoseek back in June for $70 million in cash, and turns over their ownership position in Web developer Starwave to Infoseek. In addition, Disney agrees to provide, and Infoseek will purchase, approximately $165 million in promotional support for the portal.
While the exact financials of the deal were complicated, what was quite clear from the beginning was that a Web portal, Infoseek, married almost overnight, Disney, one of the cindarella's of the offline media world. Along with this merger meant the integration of popular Starwave sites, such as NFL.com and NBA.com, as well as ABCNews.com, ESPN.com and Disney.com all into Infoseek.
Talk about a combination of hot Internet properties and the making of a legitimate Internet powerhouse. Eat your heart out Yahoo.
With this sizable investment, Disney figured that the days of being an Internet stepchild was surely behind them. And for Infoseek execs, the deal meant that they could now breathe a little bit easier, with a big brother like Disney taking them under their wing.
Wasn't it going to be grand building Disney's version of the Magic Kingdom for cyberspace? Weren't Web players such as Yahoo! now doomed by not having their own gigantic offline media partner?
So it seemed.
In September, Disney and Infoseek officially announced plans to launch a new portal called- The Go Network. The new portal would combine all of Infoseek and Disney's web properties into one super portal. Most impressive, were RelevantKnowledge's market research numbers, which indicated at the time, that Go Network would have the third largest unduplicated reach on the Internet, in terms of unique visitors.
Definitely serious food for thought for Yahoo, AOL, Microsoft and friends.
But the integration of Starwave, Disney's Buena Vista Internet Group, and Infoseek personnel have not been harmonious, to say the least. Numerous shifting of positions and jockeying for key management positions have caused four high ranking executives to leave the soon to be combined Internet companies.
And the management departures have not just occurred on the Internet side for Disney. Top Walt Disney TV/movie execs, like Richard Wolpert and Geraldine Laybourne, have also both left to start their own ventures.
And how has Disney's stock price faired since the deal was announced?
The media giant's stock price has fallen from a high of almost $40 a share, back in June, to a current price of around $27. Surely, Disney's Internet activities alone can't be blamed for their recent decline in share price, but the tricky numbers of the Infoseek-Starwave-Disney deal, definitely didn't warm investors' and analysts' hearts.
I wonder if Disney chief Michael Eisner still holds the same enthusiasm for the Internet, as when he gushed back in June that, "we are now well-positioned to take advantage of the Internet as it evolves into commercial maturity."
Maybe someone should have mentioned to Mike that the path to Internet glory and commercial maturity was not going to be a painless process.
Nonetheless, the official shareholder meeting to approve the transaction, which will be held on November 18, is still expected to easily be approved. The beta launch of The GO Network is also scheduled to be released before the end of this year.
While the jury is still out on the success of the Infoseek-Starwave-Disney combination, it's clear that the numerous executive departures, and Disney's declining stock price surrounding the Infoseek deal, have definitely provided serious food for thought for other large media companies looking into the portal space.
One can rest assured that crafty media tycoons, such as Rupert Murdoch, Ted Turner and Sumner Redstone, will be quietly watching the evolution of Disney's GO Network. They will surely be learning from Disney's mistakes and laying the groundwork for their own Internet strategies.
Could it actually be possible that the Mouse still jumped out too early onto the Net? True, they were years behind the Yahoo's of the Web, but besides Time Warner, few true traditional media companies have wholly embraced the Net.
But it's never too early to take your first step, if you're hoping to build the Web's next Magic Kingdom. Because the first mover always gets biggest slice of the cheese, and this Mouse has a lot of weight to throw around.
This must all sound like music to Infoseek CEO Harry Motro's ears.
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source: 209.67.31.6 |
