Netgateway Inc., an electronic-commerce company based in
Long Beach, Calif., has reached an agreement to provide e-commerce services throughout
systems operated by Cable One Inc., the Phoenix-based MSO owned by The Washington Post Co.
According to the agreement, Netgateway's
"CableCommerce" division will create, host and manage Cable One-branded
electronic-shopping portals that will feature local businesses and offer additional online
services such as classified advertisements, local community-event calendars and coupons.
The company will also collaborate with Cable One to sell
electronic storefronts and other electronic services to local businesses. Cable One has
about 750,000 subscribers in 18 states.
Cable One and Netgateway recently completed a market trial
of the service.
"A lot of our local advertisers seem to rely on cable
ad sales for new-media opportunities, so we're basically asking for help," Cable
One vice president of advertising sales Ron Pancratz said. "We didn't want to
start a new business. It's starting off quite well, and we plan to continue in all of
Cable One began offering its own brand of dial-up Internet
service, called CableOne.net, earlier this year.
While the company has no immediate plans for a broadband
Internet service, it has been talking with third parties like Excite@Home Corp.'s
@Home Solutions, High Speed Access Corp. and SoftNet Inc.'s ISP Channel about
possibly providing high-speed Internet service in the future.
Netgateway expects to begin launching shopping portals
through Cable One systems beginning in the fourth quarter.
This isn't the first MSO deal for Netgateway. In
August, the company reached a similar agreement with MediaOne Group Inc. to provide
e-commerce services throughout its markets.
According to that agreement, MediaOne took an equity stake
in Netgateway, and the first markets will be launched in the fourth quarter. Netgateway
plans to reach full distribution in all of MediaOne's markets in the next 18 months.
Netgateway started its CableCommerce division in June.
Based in Denver, the division was created specifically to target cable operators through
its Internet Commerce Center. The ICC consists of the hardware; the proprietary and
licensed software; and the related back-office functions and technical services necessary
for companies to offer e-commerce.
Netgateway, which is traded on the over-the-counter
bulletin board, filed in June to have its stock listed on the National Association of
Securities Dealers Automated Quotation system.
The company plans to issue about $2.5 million shares at
between $11 and $13 each, raising between $27.5 million and $32.5 million to repay debt
and for working capital, including new acquisitions.
Because the company is in a "quiet period"
pending the stock sale, it would not comment directly on the Cable One agreement.