Federal judges for the U.S. Bankruptcy Court for the Northern District of California Wednesday approved the $10 million purchase bid for certain
assets of Redwood, Calif.-based Excite@Home to Bellevue, Wash.-based InfoSpace. Inc. , as part of
the company’s Chapter 11 bankruptcy
proceeding.
The win is a minor victory for Excite@Home creditors and bondholders, who
it seem will be lucky to get back pennies on the dollars they’ve invested
in the company. The deal is a good one for InfoSpace, which will add
Excite.com’s extensive search and directory components to its existing
service.
“We believe this is a solid business opportunity that will expand
distribution for our profitable search and directory products,” said Naveen Jain, chairman and chief executive of InfoSpace. “This opportunity is in line with our strategy to continue to license our
platform of wireline products to blue- chip customers and provides another
recurring revenue stream in our wireline business.”
InfoSpace and Excite@Home officials were unavailable for comment on the
implementation date or how many jobs are affected by the deal.
The approval comes three weeks after Excite@Home announced the InfoSpace
bid for certain Excite.com assets, namely the domain names, trademarks and
user traffic. What isn’t included is any of the equipment used to run the
popular portal, employees, or Excite’s current services or products.
Excite@Home officials were likely trying to drum up interest in their
portal with the early
November announcement, hoping to lure bigger investors as it tries to
free itself from the mire of lost profits and creditor demands.
In essence, InfoSpace spent $10 million for ownership of the domain
and the people that use the portal for their home page or to meet others in
online communities. The company has already announced its intentions to
either sell or license much of Excite.com’s existing service to cash prize
Web site iWon.com.
Steve Stratz, InfoSpace public relations manager, said the company will
manage the Excite.com search and directory components, its core
competency. He said the timetable for migration is uncertain.
“We could begin migrating the Excite service to our platform by the end of
the week, but both sides are still working the terms out right now,” Stratz
said. “The important thing is how it affects our customers; Excite users
should see zero difference when they switch over.”
Even though it is already Wednesday, the court approval marks the beginning
in what is surely going to be a long week for @Home officials, who have
been left
in a holding pattern as organizations outside their control try to
determine the company’s fate.
On Friday, the same court that approved Wednesday’s deal will make a
determination on the fate of @Home’s broadband cable Internet service, with
4.1 million users worldwide. If creditors are unable to make a deal with
the cable companies that have a major presence on the @Home network, the
entire network could conceivably be shut down.
@Home officials have confirmed
the possibility, although they’ve been understandably silent when it
comes to discussing any of the bankruptcy proceeding details.
AT&T Broadband , Cox Communications
and
Comcast Corp. , the three major investors in the company
are also trying to grab a piece of the company before it’s network is shut
down, for their own purposes.
AT&T Broadband has spent the past couple months trying to win support for
its $307 million bid for the broadband ISP, unsuccessfully. Cox and
Comcast are both busy building up their networks to migrate their @Home
customers onto their own service, a process that could take months.
Comcast has been trying to buy up AT&T Broadband, which was originally
slated for an initial public offering (IPO) on the stock market. AT&T
board members have
balked at what they see as a meager price for the largest cable network
in the U.S.
Many analysts expect the AT&T purchase of @Home is an attempt to beef up
its asking price to Comcast board members down the road, one they see as
inevitable.
