Medscape Announces Termination Of Relationship With Viacom Inc.

Business Editors

HILLSBORO, Ore.--(BUSINESS WIRE)--Nov. 8, 2001

Medscape (NASDAQ: MDLI), a leading provider of digital health record applications and online medical information, today announced that, effective immediately, it has agreed to a termination of its relationship with Viacom Inc. (NYSE: VIA, VIAB).

Under terms of its original agreements with Viacom Inc. (successor to CBS Corporation), Medscape received advertising inventory, health news content and trademark license rights in exchange for shares of common stock.

As a part of the termination of the Viacom agreements, Medscape will return to Viacom the approximately $111.3 million outstanding balance of CBS advertising inventory it holds, which Medscape carries on its books at the value of approximately $56.6 million. In exchange, Viacom will pay Medscape $10 million in cash and will transfer to Medscape all 4,695,892 shares of MDLI stock that it now holds. These shares were issued by Medscape, Inc. at the onset of the CBS relationship and subsequently converted into shares of MDLI at the date of the merger of the former Medscape, Inc. with MedicaLogic, Inc. Viacom will also give up its board seat rights and Andrew Heyward, president of CBS News, will resign from Medscape's board of directors.

In addition, Medscape will cease all uses of the CBS logo and trademark and the "healthwatch" trademark after a short transition period. Medscape's consumer site will be renamed Medscape Health for Consumers and will be accessible directly via www.medscapehealth.com.

Medscape.com continues to be a dominant brand in online medical information, with nearly 4.0 million total registered users, including 675,000 registered as physicians and approximately 1.9 million registered as allied health professionals, using Medscape.com for immediate access to research, recent developments and information to guide their practices and support patient care.

"We have been closely reviewing our consumer strategy since early this year," said George Lundberg, M.D., executive vice president, editorial and editor-in-chief. "The termination of our formal relationship with Viacom enables us to pursue a more integrated professional and consumer portal strategy under the Medscape brand name and allows us to leverage the more than one million consumers registered on Medscape.com."

Mark Leavitt, M.D., Ph.D, chairman of Medscape, said, "We are fortunate to have had the opportunity to work with CBS and Viacom, and to have had the services of Andrew Heyward as a member of our board. This transaction provides us with needed cash, as we continue to work closely with Lazard Freres, our financial advisor, in the evaluation of a sale of either one or both of the Company's business units."

About Medscape

Medscape(R) (NASDAQ: MDLI) is a leading provider of digital health records and online medical information. The Company delivers patient-centered, clinical healthcare data and medical information to healthcare professionals and consumers wherever that information is needed. The core of Medscape's product portfolio is the industry-leading Digital Health Record (DHR). DHR applications and services are an integral part of the practice of medicine and are used every day by physicians and consumers across the country.

Medscape's DHR enables physicians to access patient information, share data with existing systems, communicate among practice members and capture and store quantifiable data for patient-by-patient or population-based studies. The DHR also enables practice sites to interact with their patients electronically to answer questions, schedule appointments and address personal health concerns, while offering consumers private access to their medical records and related disease management information and services. More than 15 million patients now have digital records hosted on Medscape systems. Medscape is also the leading source of peer-reviewed medical information and continuing medical education on the Web. Nearly 4.0 million members, including 675,000 registered as physicians and approximately 1.9 million registered as allied health professionals, use Medscape.com for immediate access to research, recent developments and information to guide their practices and support patient care. Approximately 1.4 million registered consumers have also come to rely on Medscape for health information.

The integration of Medscape's authoritative Web sites with the breadth of its clinical applications and products, strengthen the physician-patient relationship at--and beyond--each encounter, resulting in a positive impact on healthcare costs, efficiencies, safety and outcomes. The merger of MedicaLogic, Inc. and Medscape, Inc. in May 2000 formed MedicaLogic/Medscape, Inc., d/b/a Medscape. The Company, headquartered in Hillsboro, Oregon, currently employs approximately 365 people.

Medscape, MedicaLogic, and Logician are registered trademarks of MedicaLogic/Medscape, Inc. in the United States. Other product and brand names are trademarks of their respective owners.