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Infoseek gets go-ahead for Disney deal…

...but loses support of Bell Atlantic and has trouble with Netscape

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Internet portal Infoseek admitted yesterday that it is indeed attempting to renegotiate its search engine deal with Netscape. At the same time, it emerged Bell Atlantic is to sell almost all of its share in Infoseek, even as the portal finalised its purchase of Disney's Internet subsidiary Starwave and the commencement of their unified Web strategy. Netscape informed Infoseek last week that it wished to change its working relationship with the portal. Infoseek provides users of Netscape's own portal, Netcenter, with access to its search engine under a contract due for renewal next March. According to a Securities and Exchange Commission (SEC) filing made by Infoseek, Netscape wants to reduce Netcenter users' exposure to the rival portal by making it appear in a less prominent position on Netcenter's pages. With portals rushing to expand their userbases and thus the revenue they can net from Web-based businesses and advertising, Netscape has clearly decided it doesn't want its vistors dashing off to rival sites. At the same time, Infoseek doesn't want to lose visitors. Netcenter also features Lycos' search engine, so it may also seek to modify its agreement with that portal too. Netscape's decision comes as Infoseek's third largest shareholder, Bell Atlantic, informed the SEC it intends to sell one million of its 1.2 million Infoseek shares. Bell Atlantic's Electronic Commerce Services division owns the shares. It also accounts for 8.7 per cent of Infoseek's 1997 revenue thanks to a deal in which it supplies the portal with its BigYellow Internet directory. As yet, Bell Atlantic has not commented on its reason for making the sale. Fortunately for Infoseek, the move did not prevent shareholders giving it the go-ahead to acquire Starwave for 43 per cent of Infoseek's outsanding common stock. Infoseek has also sold Disney further shares and provided a warrant to acquire more, all in exchange for $70 million cash and a $139 million promisory note. That will in turn allow Infoseek, Disney and Starwave to combine their resources and develop a new portal called the Go Network. In addition to becoming the front-end for Disney.com, Go will also work with ESPN.com and ABCNews.com, the latter matching rival broadcaster NBC's deal with Microsoft's MSN. ® See also
Netscape to buy user-maintained Web directory
AOL, Netscape discuss closer ties
Netscape buys Web marketing company

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