Disney to Acquire Stake in Infoseek
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In addition, Disney chairman and CEO Michael D. Eisner said the company plans to combine its resources with Infoseek and recent acquisition Starwave to create a new "advanced" portal or Internet start page. Infoseek has agreed to buy $165 million in advertising on Disney's networks as part of the deal.
Under terms of the agreement, Disney is to receive 25.8 million shares of Infoseek as well as a minority position on the Infoseek board. In addition, Disney will also purchase stock warrants so that it can acquire a majority stake in Infoseek over time under certain conditions.
On April 30, 1998, Disney exercised its option to acquire Paul G. Allen's remaining interest in Seattle-based Starwave which produces Internet sites ABCNEWS.com and ESPN Sportszone. StarWave and its joint ventures were incorporated into Disney's Buena Vista Internet Group.
"This agreement stakes out an even more ambitious role for Disney in this promising medium and provides an ideal partnership for the creation of a new Internet portal service," said Eisner in a statement announcing the deal. "Through our association with Infoseek, we are now well-positioned to take advantage of the Internet as it evolves into commercial maturity."
Disney, which claims nine million users, said it will integrate both the management and technology teams of Starwave and Infoseek. The company said it expects to make no major personnel changes related to the deal.
Disney is the second traditional media company to dip into the Internet portal pool in recent weeks. On June 9, NBC announced it purchased a minority stake in minor portal contender Snap!, which is owned by CNET Inc.
Today's news may signal the birth of a new trend in which "old" media looks to marry new, as reported in today's Internet Stock Report.
Earlier rumors this week of a possible Infoseek acquisition caused the company's stock to surge. In mid-morning NASDAQ trading today, Infoseek (SEEK) was up +2 35/64 to 37 3/64.