****Lycos, CMGI Battle Over USA Merger Continues
WALTHAM, MASSACHUSETTS, U.S.A., 1999 MAR 9 (Newsbytes) -- By Bob
Woods, Newsbytes. The battle surrounding Internet portal concern Lycos Inc.'s [NASDAQ:LCOS] complicated $18 billion merger deal with USA Networks Inc. [NASDAQ:USAI] got even murkier this morning, as Lycos said CMGI Inc. [NASDAQ:CMGI] Chairman and Chief Executive Officer (CEO) David Wetherell resigned from its board of directors. CMGI owns about 20 percent of Lycos, and Wetherell has said he opposes the Lycos/USA Networks corporate marriage.
Lycos and CMGI shares surged in late morning trading on the news:
Lycos was up $15.563 or almost 19 percent to $99.438 a share, and CMGI was higher by $19.563 or 9.8 percent at $219.25 a share. USA Networks, meantime, was down $0.594 or 1.5 percent to $37.906 a share.
In a statement, Wetherell said, "After further consideration, it is
my opinion that the terms of the USA/Lycos transaction are inadequate
for Lycos shareholders. As such, I am resigning from the Lycos Board in order to be free to explore the best options available to Lycos
shareholders, including the possibility of Lycos remaining
independent."
For its part, Lycos said it remains "fully committed to the USA/Lycos
Interactive Networks transaction, which will create a next-generation
Internet company with significant revenues and cash flow." Under the
deal, USA/Lycos Interactive Networks will be "one of the world's
largest e-commerce entities and have one of the Internet's strongest
financial platforms." The company also "appreciated (Wetherell's) many contributions to the Company over the past years," company officials also said.
Terms of the deal call for Lycos shareholders to gain 30 percent of a
new company to be formed by the merger of Lycos with USA and USA's
Ticketmaster Online-CitySearch Inc. [NASDAQ:TMCS] subsidiary.
USA Networks Inc. President and Chief Executive Officer (CEO) Barry
Diller recently said he would not renegotiate the deal to buy Lycos,
even tough CMGI and other shareholders were unhappy with the pact. At
Jupiter Communications' Consumer Online Forum last week in his keynote speech, he reiterated his "new convergence" strategy, calling it successful even though it is "counter-intuitive" to what most of the Internet world currently does (Newsbytes, Mar. 2).
Comparing the current state of the Internet to "what the Land Rush
was to the end of the 19th Century," Diller said he intends to make
money on the Internet by bringing together content, entertainment and
especially commerce, or direct selling, all into one place. Advertising alone won't do the trick for Internet-based companies, he also said.
"It is this convergence that I believe will fundamentally change,
over time, everything we see here and now," Diller said. "Those
companies that will be able to link and interconnect, in seamless ways, the direct selling of merchandise of all kinds and scale, to national and local Internet searches and communities... and then to use old-line aggregators like television to tell everyone about them. Its those companies that can do all of those things that I would place (my money in), and I have."
Lycos' integration into Ticketmaster Online-CitySearch Inc., which
provides ticketing information and sales combined with locally oriented Web sites, is a prime example of Diller's view of convergence. USA Networks' properties would then promote the company's online offerings to a broad base of cable TV viewers. USA Networks also owns Internet Shopping Network, which will also be integrated into Lycos.
Lycos would bring a "national voice" to USA Networks' local and
commerce offerings, a needed part of the company's strategy, Diller
said.
Diller added he hoped top CMGI officials were listening to his
comments in the keynote audience last week.
Lycos Chief Executive Officer (CEO) Bob Davis, also at the New York
City Jupiter event, said he didn't necessarily think the impending
corporate marriage would be a threat to his current commerce and other partners (Newsbytes, Mar. 2). Instead, he sees new opportunities, as Lycos can now sell partners' products on the back of Ticketmaster tickets, on television commercials, at points of purchase in Ticketmaster retail locations, and even via suggestive selling on inbound calls to Home Shopping Network.
In its second quarter, Lycos beat the Street by a penny as it
reported adjusted losses of $0.03 per diluted share. The firm's
revenues for the quarter were $30.6 million, representing an increase
of 24 percent over its prior quarter and a 142 percent improvement over the same period one year ago.
Lycos executives attributed strong revenue growth to the company's
ability to draw larger numbers of advertisers to its site.
Reported By Newsbytes News Network, newsbytes.com .
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(19990309/Press Contacts: Michele Perry, Lycos, 781-370-2678; Emily
Fisher, Schwartz Communications, 781-684-0770 /WIRES ONLINE, PC,
BUSINESS/)
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