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Disney to Merge Internet Interests into Single Company

Strategic Insights

— 1 min read

Walt Disney unveiled plans to combine its internet interests into a single company, go.com, with the goal of exploiting the evolving medium and steering site visitors to its own sites dedicated to entertainment, e-commerce, news, and sports. The proposal, which requires shareholder approval and is expected to close by the end of the year, involves the assimilation of the Infoseek portal and will result in Disney owning about 72% of the new company. The move is seen as a key step in Disney's strategy to establish itself as a major player in the internet market.

Key Takeaways:

  • Disney plans to merge its internet interests into a single company, go.com, in an effort to exploit the evolving medium and steer site visitors to its own sites.
  • The new company will be a separately quoted entity, with Disney owning about 72% of the shares.
  • The assimilation of the Infoseek portal is expected to provide Disney with a new class of stock that will serve as an "internet-based currency for potential future strategic acquisitions."
  • Revenues for the current fiscal year are expected to be around $350m, with $150m coming from catalogue sales.
  • The loss of Harry Motro, the CEO of Infoseek, is a further indication of the difficulties conventional media companies face in holding entrepreneurial internet executives accustomed to a more free-wheeling business style.
  • Michael Eisner, Disney chairman, has expressed support for the move through his association with Jake Winebaum, a favourite who is leaving to establish an internet business incubator.
  • The new management team for go.com has not yet been named, although Thomas Staggs, group chief financial officer, will oversee the transition.

Statistics:

  • 40m: The number of site visitors to the Infoseek portal each month.
  • 42%: The percentage of Infoseek owned by Disney prior to the merger proposal.
  • 1.5: The number of shares in go.com that will be offered to Infoseek shareholders for each of their Infoseek stock units.
  • $350m: The expected revenues for the current fiscal year.
  • $150m: The amount of revenue expected to come from catalogue sales.
  • 2: The number of senior defections at Infoseek in the past month, including the departures of Harry Motro and Jake Winebaum.

Sources:

  • "Disney to Merge Internet Interests into Single Company" - Financial Times
  • "Walt Disney Unveils Internet Plans" - Lex, Page 24
  • Copyright Financial Times Limited 1999. All Rights Reserved.

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