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Prodigy up for sale

Parent SBC, now known as AT&T, hopes to close the sale of the Net's oldest brand by the end of March 2006.

Prodigy Communications, one of the oldest brands on the Internet and among Net service providers, is up for sale by its parent SBC Communications, now known as AT&T.

The Prodigy brand name and associated 66 registered trademarks in 52 countries are the intellectual property being sold, according to a document and proposal seen by CNET AT&T has contracted Ocean Tomo, an intellectual capital equity firm based in Chicago, to solicit and accept bids starting this month. The sale is expected to be closed by the end of March 2006.

"We're exploring the market for the brand and anticipate there will be strong interest for these marks, particularly in Asia," said George Kelakos, managing director at Ocean Tomo. Asian investors often look for established brands that can be reworked and marketed for similar offerings, he said.

AT&T representatives did not immediately respond to a request for comment.

Prodigy has one of the longest histories on the Internet, and hit its peak of popularity during the dot-com heyday selling DSL services.

It was founded in 1984 as a joint venture between IBM, Sears and CBS to market consumer Internet services--a rarity in the earliest days of the Net. Four years later, it launched one of the nation's first online services called Prodigy Classic, which offered basic e-mail and discussion groups to consumers.

By 1994, Prodigy became a pioneer in selling "dial-up" connections to the Web, the graphical interface for the Internet, and sold hosting services for Web publishers. By 1999, the company had become Prodigy Internet, marketing a full range of services, applications and content, including dial-up and DSL for consumers and small businesses, instant messaging, e-mail and communities. In true dot-com bubble fashion, its shares shot up 56 percent on its first day of public trading that year.

In 2000, SBC bought a 43 percent interest in the company, and Prodigy became the exclusive provider to SBC's 77 million high-speed Internet customers. More than a year later, SBC bought controlling interest for $465 million when Prodigy was the fourth-largest Internet service provider behind America Online, Microsoft's MSN and EarthLink. Prodigy in 2000 was reported to have 3.1 million subscribers of its own, of which 1.3 were DSL customers.

IBM and Sears had already sold their interest in the company in 1996, after investing more than $1 billion between them, according to the sales proposal.

The proposed sale comes as AT&T and SBC are working out some of their brand issues. In January, SBC agreed to buy AT&T for $16 billion; and the joint company agreed to change its name to AT&T in the aftermath of the deal. Still, SBC, for example, has a deal with Internet giant Yahoo to sell and market DSL (digital subscriber line) services, an offering called SBC Yahoo. An AT&T spokesman said that the company has yet to finalize a new name for the joint program that reflects SBC's parent name.

Today, Prodigy Internet is not actively marketed by SBC. Visiting Web addresses including or will direct people to SBC Yahoo services. Still, the company retains some die-hard e-mail users, Kelakos said, without specifying how many. Also, SBC has reportedly started marketing a Prodigy-branded Wi-Fi device for dial-up users.

As part of the proposed sale of Prodigy, SBC plans to retain an exclusive field-of-use license with respect to the U.S. ISP market, according to the document. Australia and Mexico markets may still have Prodigy subscribers, Kelakos said.