The Walt Disney Co. is in talks to consolidate its stake in
Infoseek Corp., the Internet portal in which it already holds a 43 percent stake.
Disney, which has been buffeted by unfavorable financial
results in 1999, is considering the possibility of acquiring the remaining 57 percent of
Infoseek's stock in exchange for issuing a Disney common stock -- a tracking stock
that would bundle all of Disney's Internet assets with Infoseek as a separate,
publicly traded unit.
"The deal could theoretically help Disney to stabilize
its stock," said Mark Riely, president of Media Group Research in New York. "It
gives them currency to do other Internet deals if they follow through on the
Because of the overheated valuations of Internet stocks,
many traditional media companies have spun off pure Internet plays into separate public
outfits to be able to position themselves for further growth.
NBC recently announced that it was bundling its online
properties with those of electronic direct-marketing firm XOOM.com and Snap, the portal
that NBC partly owns, into a $4 billion public unit called NBC Internet, or NBCi.
In contrast, USA Networks Inc. chairman Barry Diller ran
afoul when he tried to scoop up Lycos Inc., another Internet portal, as Lycos'
shareholders believed that Diller was lowballing them with his traditional media stock.
Disney's The Buena Vista Internet Group includes
Disney.com, ABCNEWS.com and ESPN.com, the latter one of the most popular sports Web sites
on the Internet. It also oversees the company's interest in GO Network, as well as
its stake in Infoseek.
Disney also announced that Jake Winebaum, who has run Buena
Vista Internet, resigned to start a new "Internet incubator," in which Disney
plans on taking a stake.
Stepping into Winebaum's shoes will be Steve
Wadsworth, who becomes president and who will report to both Disney chairman Michael
Eisner and executive vice president and chief financial officer Thomas O. Staggs.
Wadsworth will be supported by Chuck Davis, who becomes
president of electronic commerce; Kevin Mayer, who was tapped as executive vice president
of television-network product and international; and Larry Shapiro, who was named
executive vice president of business development and operations.
"While I'm sorry to see Jake leave, it gives us
the best of two worlds -- Jake building and growing a new enterprise in which we have a
significant stake, while his successors, who worked with him to build our Internet
business, keep the business growing," Eisner said in a prepared statement.