DISNEY BUYING INTERNET SERVICE.Byline: Dave McNary Daily News Staff Writer Mickey Mouse Mickey Mouse Famous character of Walt Disney's animated cartoons. He was introduced in Steamboat Willie (1928), the first animated cartoon with sound. Mickey was created by Disney, who also provided his high-pitched voice, and was usually drawn by the studio's head animator, wants to make it simple to cyber-surf. In a major move rearranging the Web's power structure, The Walt Disney Noun 1. Walt Disney - United States film maker who pioneered animated cartoons and created such characters as Mickey Mouse and Donald Duck; founded Disneyland (1901-1966) Disney, Walter Elias Disney Co. announced Thursday it is buying what will turn into a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail of one the most popular Internet search companies in a deal valued at nearly $500 million. Disney officials say they will use the Internet might of Infoseek and Disney's strongest assets - which include such powerhouse brands as ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. and ESPN ESPN Entertainment and Sports Programming Network , its theme parks and characters - to attract the hundreds of millions of people not already online. ``Our reach to those not yet online is vast,'' said Disney Internet chief Jake Winebaum. Analysts said that far more than any other Internet player, Disney can successfully market the idea of easy Web access to nontechies, including the advertising-attractive group of parents who trust the Disney name but aren't Internet-savvy yet. ``If you believe in the growth of the Internet, and I think everyone does, this positions Disney as having one of the premier vehicles,'' said analyst Stewart Halpern of Furman Selz. ``It makes for a very powerful combination.'' The companies will launch a yet-to-be-named ``portal'' site later this year but were vague about how it will look and feel other than the fact that it will seamlessly direct traffic to Disney's four major Web sites - Disney.com, ESPN SportsZone, ABC.com and ABCNews.com. The deal will put Disney in competition on at least one front with Internet companies such as America Online See AOL. and Yahoo! that also are building content on the World Wide Web, currently used by about 50 million people. But where AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. also serves as an Internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. , giving customers a local telephone number through which they can access AOL and the Internet, Disney is just offering sites - albeit, well-branded sites - to visit once someone is online. Then again, with cable and telephone companies working feverishly to bring the Internet into every home, Disney doesn't have to offer connection service. After all, Disney attracts millions of moviegoers but doesn't own any theater chains. ``What this will do is bring the Internet to a much broader consumer base,'' said Steven Cesinger, an analyst with Greif & Co. ``Because of the power of Disney's name, it's going to build consciousness of the Internet as a vehicle for getting content out there. And Disney is correctly figuring out that the Internet is going to be a dominant distribution medium.'' Burbank-based Disney, which already has 9 million people viewing its Web sites regularly, promised in late April that it would expand its Internet operations as a ``gatekeeper In an H.323 IP telephony or video environment, a gatekeeper is a device that manages domains and provides call control. It is used to translate user names into IP addresses, to authenticate users and to manage network resources. ,'' leading to rumors it would buy a stake in Excite. Instead, the entertainment behemoth behemoth (bē`hĭmŏth, bĭhē`–) [Heb.,=plural of beast], large, fanciful primeval monster, like Leviathan, evoking the hippopotamus mentioned in the Book of Job. targeted Sunnyvale-based Infoseek, which with 14 million users is the third most popular search engine behind Yahoo! and Excite. ``It's a critical step strategically,'' said Jill Krutick of Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. . ``It allows the companies to combine their strengths and it will increase the visibility of the Disney brands.'' The deals reinforce the view that traditional media companies will have to partner with Internet specialists rather than build Web portals from scratch if they are to achieve significant recognition among current and future Internet users. Thursday's deal was just the latest agreement between a mainstream media company and an Internet firm. Disney formed an alliance two weeks ago with Excite, providing easy access to Disney's sites, and NBC NBC in full National Broadcasting Co. Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. last week paid $32 million for a minority investment in Internet specialist CNET (body) CNET - Centre national d'Etudes des Telecommunications. The French national telecommunications research centre at Lannion. and its Snap! directory service. Shares of Infoseek had risen nearly 50 percent in the past three weeks as takeover rumors lifted most Internet stocks. Infoseek shares gained 62.5 cents to $35.125 after hitting $42 during the session while Disney lost 2 5/16 to $112. The $496 million deal calls for Disney to obtain a 43 percent stake in Infoseek in exchange for Disney's ownership position in Starwave Corp. - which develops Disney's Internet sites - plus $70 million cash. The deal also calls for Infoseek to buy $165 million in ``promotional support,'' such as ads at the Web site, from Disney. Disney will give Infoseek a $139 million note that's payable over five years in exchange for warrants for Disney to buy a majority stake in the company. ``This agreement stakes out an even more ambitious role for Disney in this promising medium and provides an ideal partnership for the creation of a new Internet See Web 2.0 and Internet2. portal service,'' said Disney chief Michael Eisner Michael Dammann Eisner (born March 7, 1942) was CEO of The Walt Disney Company from September 22, 1984 to September 30, 2005. Early life Michael Eisner was born to a wealthy family in Mt. Kisco, New York, and raised on Park Avenue in Manhattan. . ``We have made great strides as a sports, news and entertainment programmer on the Internet over the past four years. Through our association with Infoseek, we are now well positioned to take advantage of the Internet as it evolves into commercial maturity.'' Analysts believe the entertainment giant is in the right place at the right time even though profits won't show up on the bottom line immediately. ``This is a move that looks to the future and not toward any near-term financial benefits,'' Halpern said. Cesinger said the deal is also likely to boost pressure on Disney's major media rivals - Time Warner Inc., Viacom Inc. and News Corp., in particular - to increase their Web presence. ``I would not be surprised to see one of them go after someone like Yahoo! or Excite,'' he said. SEARCH ENGINES GET HOT Sites used to search the Internet have become the hottest part of the Web recently. A few key developments recently: April 9: Shares of Yahoo! rise 16 percent after first-quarter earnings hit $4.3 million, well above Wall Street estimates. April 28: Disney Chairman Michael Eisner says his company wants to be a ``gatekeeper'' on the Web. April 30: Disney buys the two-thirds of Internet site developer Starwave Corp. that it did not already own. May 5: Excite agrees to pay Netscape $70 million to be the search engine at Netscape's Web site for two years. May 21: Excite spurns an unsolicited $1.7 billion takeover bid Noun 1. takeover bid - an offer to buy shares in order to take over the company two-tier bid - a takeover bid where the acquirer offers to pay more for the shares needed to gain control than for the remaining shares from fish protein producer Zapata. June 4: Disney, rumored to be buying Excite, instead forms an alliance with the company. June 8: America Online buys Israeli Web specialist Mirabilis for $287 million. June 9: NBC buys 60 percent of CNET's Snap! search directory for $38 million and 5 percent of CNET for $28 million. June 17: Financial Times reports that America Online rejects an AT&T takeover bid that was ``comfortably above'' AOL's $19 billion market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. . CAPTION(S): box Box: Search engines get hot (see text) |
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