Liberty Gives Wink the Nod on Merger


Liberty Broadband Interactive Television Inc. didn't wait long before announcing its second major acquisition in the consolidating ITV space.

The Liberty Media Corp. spin-off — which had announced its acquisition of middleware provider OpenTV Inc. in early May — last week struck a deal to merge with enhanced television technology provider Wink Communications Inc.

Pending shareholder and regulatory approval, LBIT plans to pay $3 per share for Wink common stock, which values the deal at roughly $100 million in cash. Although its share price briefly exceeded $70 during its heyday early in 2000, Wink was trading at $1.70 before the Liberty transaction was announced early last Monday. The deal could close as early as August.

Following the news last week, the share price rose to just pennies below the $3 buyout price. Some Internet chat room investors even pondered whether the stock might be worth more in the event the LBIT offer sparked a bidding war for Wink.

But according to last week's 8-K filing with the Securities and Exchange Commission, LBIT's contract prohibits Wink from soliciting or entertaining competing bids for the company.

Wink offers a range of enhanced-television services for advertisers, programmers and multichannel-video providers. The company has lost millions as it waited for the fledgling interactive-advertising market to develop.

To date, DirecTV Inc. has been most aggressive in deploying Wink's enhanced-TV services. The most successful such offering is an application from The Weather Channel.

Last week, DirecTV executive vice president Larry Chapman said he hasn't been satisfied with the results of the early television commerce and interactive advertising on Wink, but added that the two companies would work together to beef up revenue opportunities.

Chapman said the news of Liberty's investment in Wink was positive.

"It's important for any entity like Wink to have a source of capital stability to be able to evolve and grow its service," Chapman said.

DBS competitor EchoStar Communications Corp. previously announced plans to use Wink technology, but has not yet deployed those applications, spokesman Marc Lumpkin said last week. EchoStar has started to roll out interactive television applications that use OpenTV technology. The two ITV technologies are not mutually exclusive, and Wink can run on top of OpenTV.

If EchoStar's merger with DirecTV parent Hughes Electronics Corp. is approved, the company may overhaul the technology platform for one or both of the DBS platforms. A transition team is looking at which technologies and standards it would likely use following a merger.

LBIT's investment in Wink and OpenTV could give Liberty Media chairman John Malone, who has long had his eye on the U.S. DBS market, a hand in the revenues that it can generate through interactivity and t-commerce, even if he's not able to directly control a DBS provider.

LBIT president Pete Boylan has been a supporter of both satellite television and t-commerce, working in ITV most recently at Gemstar-TV Guide International Inc.

Wink CEO Maggie Wilderotter was on vacation and not available for comment last week, a spokesperson said. Wilderotter and Wink's current management are expected to continue to oversee company operations from its headquarters in Alameda, Calif.

LBIT is based in Tulsa, Okla.