Source Dampens Takeover Talk

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Prodded by the NASDAQ Stock Market, Source Media
Inc.
said last Wednesday that it had no news to report that would justify the
recent surge in its share price.

The Interactive Channel's parent
company's shares dropped on that nonannouncement, to $27.50 at last Wednesday's
close from $32.25 Tuesday. The price skyrocketed up Tuesday from $21.38, on huge volume,
after rising sharply late the previous week.

"We continue to have discussions with cable operators
and various technology and media companies about licensing our software technology and
other transactions," Source said, after NASDAQ requested a comment on acquisition
rumors.

Apparently, as Source conceded in its statement, rumors
were rampant in Internet chat rooms that some other company -- Yahoo! Inc., Microsoft
Corp. and America Online Inc. were mentioned -- might be in talks to buy the company.
Source owns interactive-television patents that might be valuable to those companies.

Merger-and-acquisition rumors popped up in various corners
of cable-related stocks last week. Finance officers at two MSOs said the volume of phone
calls from analysts and reporters speculating on various combinations was high, and
scenarios ranged from realistic to ridiculous.

"I've heard a million of them this week,"
one of the finance officers said, adding that some of the rumors might be coming because
cable executives are sensibly asking their bankers whether they should sell or buy,
especially after the AT&T Corp.-Tele-Communications Inc. merger.

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