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Disney hitch to Starwave?
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February 14, 1997: 8:15 a.m. ET
Entertainment giant reportedly to take one-third stake in Web design firm
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NEW YORK (CNNfn) - Walt Disney Co. has reportedly signed a letter of intent to acquire roughly one-third of Starwave Corp., which designs and runs Websites including Mr. Showbiz and ESPNET SportsZone.
According to Friday's Los Angeles Times, the preliminary agreement also calls for the entertainment giant to take over management control of the company despite its minority ownership.
The deal values Starwave, which is owned by Microsoft co-founder and billionaire investor Paul Allen, at close to $300 million, making it the highest price ever paid for a company which designs and operates Websites. A source close to the situation said Disney's investment would be in the $80-million range.
Neither Allen's representatives nor Disney would comment on the deal, the Times said.
Disney's interest reportedly springs from a desire to use Starwave's talent to launch an online news site with its ABC unit. It also hopes to offer more family-based fare on the Web.
Starwave has won critical acclaim for its work on the ESPN site but is widely thought to be poorly managed. Disney's reputation for putting strong management in place may explain Allen's move to give them control, the Times said.
Disney added ESPN to its list of impressive holdings last year as part of its $19 billion acquisition of Capital Cities/ABC Inc..
Bellevue, Wash.-based Starwave does not disclose earnings but its revenues are estimated to be about $15 million and analysts assume it is losing money.
Allen's other properties include the Portland Trailblazers basketball team, Ticketmaster Group Inc., a string of high-tech companies and a large stake in DreamWorks SKG.
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Starwave Corp.
Disney
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