NBC Buys Stake In ValueVision

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New York -- NBC and GE Capital Services are buying
stakes in home shopping network ValueVision International Inc., with plans to boost
ValueVision's cable distribution and to jointly develop Internet-sales opportunities.

With the Internet part of that equation still unsettled,
the deal was hard to assess last week, other than being good for ValueVision shareholders
and not very risky for the General Electric Co. units, analysts said.

While it resembles, in some respects, the thinking behind
USA Networks Inc.'s proposed merger with Lycos Inc., this deal should proceed much
more smoothly.

According to ValueVision CEO Gene McCaffery, the game plan
is to partner up with an Internet portal, and not to try to buy one, the way that USA
chairman Barry Diller is doing with Lycos. That would avoid the problem that Diller is
having in trying to combine assets with very different kinds of market values.

The deal with NBC is aimed at enhancing ValueVision's
value, and not at creating a new model for media valuations, McCaffery said.

NBC and GE Capital paid $44 million for 15 percent of
ValueVision, obtaining warrants to buy an additional 4.9 percent later that are based
partly on increasing ValueVision's distribution.

GE could end up owning 39.9 percent of the shopping network
if ValueVision shareholders approve other warrants that are based solely on stock prices
at the time when the warrants would be exercised, officials said.

ValueVision's share price rose 14 percent on the news,
to $11.50 last Tuesday from $10.13 the day before, and it bumped up to $12.94 at
Wednesday's close before closing at $12.31 on Thursday.

The deal also lifted shares in Shop At Home Inc., another
electronic retailer.

NBC will take over all cable-affiliate relations for
ValueVision, which, with about 15 million homes on a full-time-equivalent basis, is a
distant third behind QVC Inc. and USA's Home Shopping Network in the home shopping
sector.

NBC Cable president Tom Rogers called ValueVision a
"stellar growth product" that NBC can help by applying the distribution
expertise that got CNBC into 68 million cable homes and the newer MSNBC into 48 million
homes.

ValueVision can also be useful in hawking NBC merchandise
and, more broadly, in generating more revenue from viewers and cable subscribers.

Once the Internet-portal part of the deal gets done,
ValueVision and its Web site can also be rebranded easily, since its existing brand
doesn't amount to much.

McCaffery said the network has had some modest success,
adding about 20 percent to its distribution base in the last six months of 1998. But
NBC's distribution muscle (for which ValueVision will pay $1.5 million per year) and
cross-promotional capabilities should clearly help, he acknowledged.

Rogers and NBC Cable Distribution president David Zaslav
said they would pitch ValueVision as a network that will be increasingly attractive to
operators after it's promoted on NBC's other networks. NBC has been able to turn
its MSNBC Internet site into a popular destination that way.

ValueVision would become the first home shopping service
with one of the "Big Three" broadcast networks' backing, Rogers said.

Cable operators interviewed last week, though, said
privately that they didn't see much value in adding ValueVision.

Mark Riely, an analyst at Media Group Research, who issued
a company report and a "buy" rating on ValueVision March 5, said NBC would
clearly help to accelerate ValueVision's distribution growth.

And the fact that ValueVision isn't wedded to an
established brand should help when NBC finds an Internet partner and starts heavily
promoting an electronic-commerce service that will intersect between TV and the Internet,
Riely added.

"NBC's using a creative, low-risk approach that
could still get them a huge return," he said.

Who that Internet-portal partner will be is unclear. NBC
and CNET Inc. own the Snap portal, but analysts said NBC was clearly looking for more.

The portal that got mentioned the most in speculation last
week was Lycos. While Diller and Lycos chairman Bob Davis continued to insist that their
merger will get done, Diller's battle with Lycos shareholder CMGI Inc. over the deal
intensified last week.

CMGI CEO David Wetherall resigned from the Lycos board, and
he is trying to find other bidders. Sources said NBC and ValueVision had previously
discussed possible linkups with Lycos before Diller cut his deal.

Linda Moss contributed to this report.

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