Lycos and Home Shopping Network to merge

USA Networks was expected overnight to announce that its Home Shopping Network (HSN) cable television unit will merge with Lycos, the Internet portal, according to a report in today's Wall Street Journal. The deal is expected to create an electronic commerce giant that leverages both Lycos' Internet business and HSN's broad reach as a leading cable television shopping channel, and will have have a market capitalisation of $US20 billion.

USA Networks was expected overnight to announce that its Home Shopping Network (HSN) cable television unit will merge with Lycos, the Internet portal, according to a report in today's Wall Street Journal.

The deal is expected to create an electronic commerce giant that leverages both Lycos' Internet business and HSN's broad reach as a leading cable television shopping channel, according to the report.

Neither Lycos nor USA Networks could be reached for immediate comment.

The combined company is expected to have a market capitalisation of US$20 billion, according to the report. Precise terms of the deal could not yet be determined, the report added.

Led by media titan Barry Diller, USA Networks will hold 61.5% of the combined company which will be called USA/Lycos Interactive Networks, the report said. Diller will serve as the company's chairman while Lycos President and Chief Executive Officer Robert Davis will maintain his current position at the new company.

USA Networks will also contribute other Internet-related assets it holds including TicketMaster Online-CitySearch Inc., a seller of entertainment tickets and a unit of USA Networks, the Wall Street report said. Under the terms of the deal, Ticketmaster Online will merge with Lycos, meaning that Lycos shareholders will control 30% of the new company, while TicketMaster Online shareholders will hold 8.5%, the report said.

If the report proves true, the deal will end rampant speculation that Lycos is on the selling block. The deal will also add another link to a growing chain of mergers among media companies and Internet startups.

A portals mergers frenzy kicked off last June when Walt Disney bought a 43% stake in Infoseek for $70 million by selling its interest in Web developer Starwave to the portal.

Last month, AtHome Corp. announced its intention to purchase Excite Inc. for an all-stock transaction valued at $6.7 billion. The deal followed a surprise announcement in November that America Online Inc. (AOL) would buy Netscape Communications Corp.

Earlier this month, speculation arose that NBC might take a 35 percent stake in Lycos and merge NBC's Snap portal with Lycos. Other names circulating as potential Lycos suitors included Time Warner Iand Bertelsmann AG.

Lycos' Davis, meanwhile, has publicly maintained that the company would remain independent.

Lycos’ stock price has benefited from all the rumors, which have helped raise the company's market capitalization to over $6 billion [B].

Lycos, in Waltham, Massachusetts, is at +1-781-370-2885 or http://www.lycos.com/.

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