BCE aims to create Internet mega
salva- article on BCE in Globe 13May99. your concern on the delays and more delays , this gives you an insight on the wheeling and dealing going on. BCE wants control of the portal, but having difficulty getting the partner to comply. Excite bought out, Lycos in adeal untill yesterday , may come back into play. Now deal with Canoe if Quebecor complies with loosing controling interest-maybe not. BCE looking but must come up with the correct deal, dont take 1st one that comes along.--IMO
BCE aims to create Internet mega- site Sympatico, Canoe
MARK EVANS Technology Reporter
BCE Inc. is trying to create a mega-site on the Intenet by merging fhe two most popular Canadian content sites, after failing to join forces with file giant U.S. por-tal players Excite Inc and Lycos Inc.
BCE wants to merge Sympatico.ca - in which it owns a 75-per-cent stake through MediaLinx Interactive Lp - with Canoe, said MediLinx president Shaun Purdue. BCE owns 40% of Canoe, while Quebecor Inc holds 60%.
We would like to put Sympatica and Canoe together," Mr. Purdue said. "Que-becor knows this."
Quebecor, however, has given no indica-tion that it is willing to sell comntrol of Canoe, which it inherited in January with the acquisition of Sun Media Corp. for $983-million.
Wayne Parrish, Canoe's chairman and a vice-président with Sun Media, said he "sees file underlying logic of merging Canoe with Sympatico] but the issue for us is control."
BCE is keen to become a bigger player on the Internet because it needs to find new sources of growth to make up for diminishing returns in its telephone markets.
According to industry sources, BCE has tried to pursue other deals with high-traffic portals, which offer services such as free E-mail and information, and provide ways to buy products and services over the Web.
One near-deal failed to gel, while Bell Canada's board scuttled a second proposed alliance in the spring, which led to the departure of Mr. Purdue's predecessor, An-drew Scoular.
Sources said BCE was in "substantial ne-gotiations" to merge Sympatico with Redwood City, Calif.-based Excite before that company was acquired by At Home Corp. in January for $7.5-billion (U.S.).
After that opportunity evaporated, a source said, Mr. Scoular reached a tentative agreement with Lycos that would have made MediaLinx a minority partner.
However, the proposal was "unpalatable" to Bell Canada's board of directors, who made it clear that BCE wanted a controlling stake in any deal with another high-traffic Web site. "Bell wanted a different type of deal," the source said.
Mr. Scoular, hired last year by MediaLinx to transform Sympatico into a global site for electronic commerce and content, was adamant that the deal with Lycos was the best way to put Sympatico into the top tier even if it meant holding a minority stake.
The difference in opinion caused Mr. Scoular to leave Sympatico in mid-April.
"It was (Bell's) conclusion ii wasn't going to work out," Mr, Scoular said in a telephone inter-view from San Francisco, adding that he is still in negotiations with Bell about a settlement, but de-clined to elaborate further.
In early February, Lycos agreed to merge with USA Networks Inc. That deal, however, fell apart yes-terday when USA Networks termi-nated its offer after Lycos shareholders wouldn't support the deal.
The source said it's possible that BCE and Ameritech, which bought a 20-per-cent stake in Bell Canada in March, could use their financial clout to make a bid for Lycos.
After Mr. Scoular's Lycos pro-posal was rejected, Jean Monty, BCE's president and chief executive officer, said in late March that Bell was interested in acquiring a mi-nority stake in a U.S. portal com-pany such as America.Oniine inc.
BCE's interest in a Sympatico. Canoe marriage reflects Mr. Mon-ty's vision of BCE becoming
major presence in the Internet industry.
Achieving that goal has been difficult, and BCE is still trying to de-termine how to combine all of the Internet investments into a cohesive unit.
The Montreal-based conglomer-ate's other assets include 20 per cent of multimedia software maker ExtendMedia Inc.; 68 per cent of BCE Emergis Inc., which builds electronic commerce systems; and BCE Nexxia Inc., a high-capacity high-speed national network.
Sympatico and Canoe, both launched in 1996, rank among the most popular Web sites in Canada. with more than 50 million page views a month each.
Canoe offers a wide range of in-formation and services, from new to free E-mail. Sympatico also has extensive content and has started to branch out into electronic com-merce through licencing agree-ments with companies such as online travel agency Travelocity, a unit of Sabre Group Inc. Canoe and Sympatico generate revenue from advertising, but the Canadian market has been growing slower than the U.S. market. Analysts expect that on-line advertising will climb to $37-million (Cana-dian) this year from $20-million a year ago, a far cry from the $1.92-billion (U.S.) market south of the border in 1998. Mr. Purdue said a Sympatico- Canoe deal makes sense because of the "relative strengths" of both services. If the two merged, recruit-ing a U.S. partner to provide tech-nology and development funds would be the next step, he said. He would not comment on the potential value of Canoe and Sym-patico together, but noted that the prices of U.S. Internet companies has "been staggering."
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