Disney To Close Go.com Web Site
Monday, January 29th 2001, 12:00 am
News On 6
LOS ANGELES (AP) â€” The Walt Disney Co. became the latest media company to slash its online operations, saying Monday it will shutter the Go.com Web site and fold its Walt Disney Internet Group back into the company.
The Group will operate under the same management as a Disney division overseeing such Web sites as Disney.com and ESPN.com. The consolidation will result in 400 layoffs.
The move comes only weeks after News Corp., the media empire controlled by Rupert Murdoch, said it was shutting down its online division and eliminating more than 200 jobs. Other media organizations, including The New York Times Co., have also recently announced cutbacks in their online operations.
Disney said Monday it will continue to operate a streamlined Go.com site while it moves various services and registered users to its other sites. The company said it is also looking at selling some of its assets, including the Infoseek search engine it bought in 1998.
Disney president Robert Iger said the decision came after it became clear that Go.com would never become an industry leader and the separate stock would provide neither money for investment or acquisition nor serve as a tool to retain employees.
``Given the fact we were not an industry leader, it was clear to us this business was a challenging business for us and would only get more challenging and the time to shut it down was now,'' Iger said.
Iger said Disney was also hurt, along with many other companies, by the sharp decline in the value of Internet stocks that began last April.
``In looking forward, it was pretty clear the best way to maximize growth was to manage it as one company with one set of shareholders, not two,'' Iger said.
As a result, the tracking stock for DIG will be converted into 0.19353 of a share of Disney common stock as of March 20, 2001.
Shares of the Internet Group were trading down $1.88 to $4.05 after dropping down as far as $3.68. Meanwhile shares of Walt Disney were trading at $30.82, up $1.01, on the New York Stock Exchange.
The management of the Internet Group will continue to run Disney's separate Web properties, Iger said. He said he did not expect any further layoffs or cost-cutting measures immediately.
The move was praised by Wall Street analysts.
``Good riddance,'' said Jeffrey Logsdon of Gerard Klauer Mattison & Co. ``At the time it was launched, there was a lot of enthusiasm about monetizing one's Internet assets. Clearly that was three investment lifetimes ago and doesn't particularly serve the interests of the Disney shareholders any longer.''
Disney announced its entrance into the Internet business in 1998, when it acquired Infoseek and said it would construct its own Web service to compete with Yahoo! Inc. and America Online Inc.
In January 2000, Disney backed off its grand plans and said it would focus its Go.com site on entertainment and leisure as a way of separating itself from competitors.
The Go.com site relaunched in September with a new design that more prominently featured Disney's individual Web sites, which were often leaders in their category. The new site kept the powerful Infoseek search engine, but served more as a place for visitors to find entertainment news and plan vacations.
``This was not about lack of confidence in the content or dissatisfaction in the product,'' Iger said. ``But we were never able to drive traffic to the point where this would ever become an industry leader.''
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Walt Disney Co.: http://www.disney.com