The Walt Disney Co is acquiring a 43% stake in search engine company Infoseek Corp in a deal that creates a formidable web services and content company. In exchange for the stake in Infoseek, Disney is handing over its ownership stake in web design outfit Starwave Corp and $70m in cash. The deal forms an […]
The Walt Disney Co is acquiring a 43% stake in search engine company Infoseek Corp in a deal that creates a formidable web services and content company. In exchange for the stake in Infoseek, Disney is handing over its ownership stake in web design outfit Starwave Corp and $70m in cash. The deal forms an entity that combines the assets of news and sports sites ABCNews.com and ESPN.com – currently joint ventures between Starwave and Disney – with one of the internet’s most popular search services. Also as part of the deal, Disney will provide, and Infoseek will purchase, $165m in promotional support for the new portal service. The combined company is described by Disney as an ideal partnership for the creation of a new internet portal service. A little more than a year ago, Disney purchased its majority stake in Starwave (CI No 3,133), the company that created the web site for its ABC unit. Infoseek and Disney, which currently boast 14 million and 9 million users respectively, plan to launch a portal service later this year that will provide what they describe as the best of Infoseek’s and Disney’s existing services, enhanced by Starwave’s design technology. The portal service will feature, on a non-exclusive basis, ABC.com, ABCNews.com, Disney.com, Disney’s Blast Online, ESPN.com, plus the official league sites of the NFL, NBA and NASCAR. A spokesperson said that the portal site is currently under development and will eventually house the content and services of all three companies, under a yet-to-be-determined different brand name. Links between the existing sites will eventually be replaced by a completely integrated portal in the coming months. Terms of the deal call for Disney to receive 25.8 million shares of Infoseek common stock and a minority position on the Infoseek board. Disney will also pay roughly $140m for warrants that will enable to eventually buy a majority stake in Infoseek over time if it chooses to. Infoseek said it will also acquire the shares of Starwave not owned by Disney – about 3 million – in exchange for Infoseek shares. Disney had already purchased the chunk of Starwave owned by founder Paul Allen, who was the largest single shareholder in Starwave. The new entity will continue to operate under the name Infoseek and the three companies said that no major personnel changes are anticipated.