RealTime IT News

Time Warner Eyes New Internet Stakes

Time Warner Inc. is said to be looking to take a stake in several leading Internet businesses, including music retailer CDnow Inc. and search engine Lycos Inc.

If the media giant does follow through on the speculation, it will be an about-face considering the company has previously said the high valuations of today's Internet leaders make a takeover financially unattractive. The company has indicated its Road Runner high-speed Internet service, which competes with @Home Networks, is the best way for it to capitalize on the Internet boom.

Speculation over Lycos' future has intensified since @Home agreed to buy Excite for about $7.5 billion. Lycos chiefs have also talked with several other companies about taking stakes. Reports indicate Lycos is looking for someone to make a minority investment, with a maximum stake of about 35 percent, rather than a company to buy Lycos.

A Lycos spokesman declined to comment on the latest rumors and Lycos Chief Executive Officer Robert Davis reaffirmed this week that Lycos intends to remain independent.

As for CDNow, sources say Time Warner favors taking a stake in the music retailer rather than buying the company. That would allow the company to increase its Internet music sales, which are currently handled by sites set up by its various labels, including Atlantic Records.

Time Warner refused to comment on the report and CDnow could not be reached for comment.

Time Warner is also said to have talked to Compaq Computer Corp. about taking a stake in its AltaVista search engine. However, those discussions have reportedly broken off.

Time Warner is following the moves of several other large media companies that have bolstered their online presence. To help accomplish that goal, the company recently named Michael Pepe, an former executive in its publishing division, to head up its new electronic-commerce division.