Created 04/14/1999 - 00:00
Disney, the Burbank, California entertainment company, is considering ways
in which it could package its Disney Online assets together with the
company's 43% stake in Infoseek Corp., of Sunnyvale, California, for a
public offering, according to THE WALL STREET JOURNAL. Disney and Infoseek
jointly created and own the Go Network Internet portal launched earlier
this year. Disney Online operates the Disney.com Web site. Disney has
recently begun negotiations to take majority control of Infoseek sooner
than expected. Disney's 1998 pact to take a stake in Infoseek allows Disney
to take majority control eventually, but not for at least three years.
Infoseek is a publicly traded company already and could itself become the
vehicle for a separate Disney Internet stock, if Disney can take control of
the company sooner rather than later. No decision appears imminent, and the
company could yet decide to do nothing. Issuing a separate Internet stock
could create more problems than it solves. It would likely pose complex
legal and logistical problems for Disney in dealing with the new entity.
Disney declined to comment. As reported in the WALL STREET JOURNAL on
Monday, April 12th, Infoseek Chief Executive Officer Harry Motro wouldn't
comment except to say that Infoseek is "always talking to Disney about how
to build a great product for the consumer. We are very excited about the
potential for working with them in developing an even deeper relationship."
Lately, Disney officials and Wall Street alike have been frustrated with
the sluggish performance of Disney's stock. It has been especially vexing
that, in an Internet-crazed market, the Web operations of companies such as
Disney don't seem to get the same high valuations because they are hidden
inside bigger companies. The call for a Web-focused Disney offering
intensified when J.P. Morgan Securities Inc. analyst Richard J. MacDonald
raised the prospect in a recent report. Mr. MacDonald argued that
traditional valuation methods are shortchanging Disney's true value. He
called for "a tracking stock or other vehicle through which public
investors can accord value to the company's non-earnings-producing assets,"
as reported by THE WALL STREET JOURNAL.