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Lycos, NBC in 'Net deal?
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February 4, 1999: 7:58 p.m. ET
Rumored deal could be followed by a spin-off of NBC's Internet units
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NEW YORK (CNNfn) - Add Lycos to the growing list of Internet companies rumored to be involved in a deal with a media giant.
On Thursday, The Industry Standard, an Internet trade publication, reported NBC may be ready to take a substantial equity stake in Lycos in an effort to broaden NBC's reach on the World Wide Web and position the company to be one of the leading Internet portals.
Portals, which serve as the gateways to the Internet, have become the hottest real estate in cyberspace. Last year, Walt Disney Co. (DIS) acquired a 43 percent stake in Infoseek for $420 million and NBC grabbed a 5 percent in CNET, an Internet content provider that also owns the Snap! portal.
The Internet merger mania has accelerated this year with @Home snatching up Excite Inc. for $6.7 billion and Yahoo! buying Geocities for $3.6 billion.
Rumors are rampant
Officials from NBC, Lycos and CNET all declined to comment on the report.
However, the Internet trade press has been rife with rumors of a possible NBC deal for several weeks.
Last week, Electronic Media, a television industry trade publication, said NBC, a unit of General Electric Co. (GE) , is looking to strike a deal with America Online Inc. (AOL), Yahoo! Inc. (YHOO) or Lycos Inc. (LCOS). The network was also said to be considering a spin-off of its $2 billion worth of Web holdings this spring.
NBC was also said to be in talks with Road Runner, a joint venture of Time Warner Inc. (TWX), MediaOne Group (UMG), Microsoft Corp. (MSFT), Compaq Computer Corp. (CPQ) and Advance/Newhouse. (Time Warner is the parent company of CNN and CNNfn.)
NBC could give Lycos a boost
According to The Industry Standard, NBC would merge Lycos with Snap! as a prelude to a spin-off all of its Internet properties into a separate company.
The publication, quoting NBC and industry sources said a partial takeover of Lycos could be worth well over a billion dollars. Lycos has a market capitalization of $5.6 billion.
Industry analysts said the combination of Snap! and Lycos would result in the world's largest portal, surpassing the current leader Yahoo!
"This would make a lot of sense for Lycos," said Ron Rappoport, an analyst with Internet marketing researcher Zona Research, said. "It would bring a traditional media company to its corner - and that's invaluable for a portal."
With its marketing prowess and high profile among television viewers, NBC could pitch in both via air-time and financial backing. "NBC has a lot of cash it could throw into a 'Net operation," added Rappoport.
A deal would also vault NBC into the upper echelon of Internet traffic, competing with America Online Inc. and Netscape Communications Corp., which recently announced plans to merge, and @Home Corp. and Excite Inc. (XCIT), which also announced plans to merge.
Lycos shares closed Thursday at 129-3/8, down 1-1/8 on volume of nearly 1.8 million shares. Normal average daily volume for Lycos is 4.6 million shares.
GE closed at 100-1/8, down 2-3/4. More than 4.7 million shares changed hands, up slightly from GE's average daily volume of 4.1 million shares.
CNET (CNET) tumbled 6-9/16 to 137-15/16 on volume of 951,900 shares, nearly twice the average daily volume.
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