WebMD, News Corp. Seek Second Opinion
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WebMD and News Corp. Tuesday revised their strategic relationship, which was forged in December 1999.
The renegotiations are a part of a strategy in which partnerships are being re-evaluated in light of several criteria, including profitability, strategic relevance and the impact of future new revenue opportunities, noted Martin J. Wygod, CEO of WebMD.
"Today's announcement highlights our commitment to redefining our relationships so that they make both economic and strategic sense for WebMD and our partners." he said. "In addition to reducing WebMD's outstanding shares, I believe that we have restructured this relationship in a way that allows both WebMD and News Corp., to apply their respective expertise and resources where each can create the greatest value for shareholders."
As part of the renegotiations, News Corp. will transfer its 50 percent interest in an international joint venture back to WebMD, relieving News Corp. of its obligation to provide $300 million of international media services, the first $100 million of capital, and any future capital requirements to the international joint venture.
Meanwhile, WebMD will transfer its 50 percent stake in the Health Network, a health-focused cable network, to News Corp. Upon transfer to News Corp., WebMD will be relieved of all future capital commitments to The Health Network and will not be required to issue an additional 8.3 million shares of its common stock in exchange for News Corp.'s 50 percent interest in The Health Network.
Under the terms of the revised contract, WebMD will retain the rights to $205 million in domestic media services over 10 years and will continue to provide its content for use across News Corp's media properties for $48 million over 4 years.
News Corp will transfer to WebMD the 155,951 shares of WebMD's Series A preferred stock that it issued in January 2000 and WebMD will issue to News Corp a warrant to acquire 3 million shares of its common stock at an exercise price of $15 per share. The 155,951 shares of WebMD's Series A preferred stock would have been convertible into 21,282,645 shares of WebMD common stock in January 2003.
WebMD's restructuring plan is ongoing. Last week the firm announced that it had terminated a strategic alliance with DuPont.