Disney may convert internet holdings

Disney, the Burbank, California entertainment company, is considering waysin which it could package its Disney Online assets together with thecompany's 43% stake in Infoseek Corp., of Sunnyvale, California, for apublic offering, according to THE WALL STREET JOURNAL. Disney and Infoseekjointly created and own the Go Network Internet portal launched earlierthis year. Disney Online operates the Disney.com Web site. Disney hasrecently begun negotiations to take majority control of Infoseek soonerthan expected. Disney's 1998 pact to take a stake in Infoseek allows Disneyto take majority control eventually, but not for at least three years.Infoseek is a publicly traded company already and could itself become thevehicle for a separate Disney Internet stock, if Disney can take control ofthe company sooner rather than later. No decision appears imminent, and thecompany could yet decide to do nothing. Issuing a separate Internet stockcould create more problems than it solves. It would likely pose complexlegal and logistical problems for Disney in dealing with the new entity.Disney declined to comment. As reported in the WALL STREET JOURNAL onMonday, April 12th, Infoseek Chief Executive Officer Harry Motro wouldn'tcomment except to say that Infoseek is "always talking to Disney about howto build a great product for the consumer. We are very excited about thepotential for working with them in developing an even deeper relationship."Lately, Disney officials and Wall Street alike have been frustrated withthe sluggish performance of Disney's stock. It has been especially vexingthat, in an Internet-crazed market, the Web operations of companies such asDisney don't seem to get the same high valuations because they are hiddeninside bigger companies. The call for a Web-focused Disney offeringintensified when J.P. Morgan Securities Inc. analyst Richard J. MacDonaldraised the prospect in a recent report. Mr. MacDonald argued thattraditional valuation methods are shortchanging Disney's true value. Hecalled for "a tracking stock or other vehicle through which publicinvestors can accord value to the company's non-earnings-producing assets,"as reported by THE WALL STREET JOURNAL.

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