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Ticketmaster-CitySearch CEO defends deal

The merger of Lycos, USA Networks and Ticketmaster Online-CitySearch is worth more than investors are being led to believe, according to Charles Conn.

Pushing a line some investors aren't buying, CEO Charles Conn of Ticketmaster Online-CitySearch today defended the USA Networks-Lycos merger, which includes his company, saying the Internet would account for more than 50 percent of the company's revenues within three years.

"The new company has the potential to be the world's largest e-commerce and media network," said Conn. He spoke this morning at the BancBoston Robertson Stephens investors conference in San Francisco.

The statements come as a group of Lycos shareholders has filed a lawsuit against the company, alleging its executives misled investors by saying the company would remain independent at the same time it was engaged in merger talks. On January 25, Chief Executive Robert Davis told an audience at the Massachusetts Software Council, "What we're most committed to is the independence of Lycos." On February 9, Davis and Diller announced the merger.

Keith Benjamin, a BancBoston Robertson Stephens analyst, is bullish on the deal, despite investor disappointment that USA Networks didn't offer to buy Lycos outright. Benjamin advised investors to "take advantage of the confusion" surrounding the deal to buy Lycos and Ticketmaster Online-CitySearch stock.

Lycos investors who expected a higher price as well as shareholders in newly public Ticketmaster Online-City Search are overlooking the cash that will be generated by a new company that spans old media and new, television and the Internet, Conn said

"It will create a consumer media and e-commerce powerhouse that is different from the other portals," Conn said, pointing to the myriad opportunities to promote online properties on USA Network's cable TV channels.

CMGI, which owns 20 percent of Lycos, has waffled over supporting the deal.

Conn became the second key executive in the deal to campaign for its approval, following bullish comments yesterday by Lycos vice president of e-commerce Jeff Bennett.

Conn argued that based on his calculations, the new company would be worth $18 billion to $22 billion, without counting efficiencies he expects to result from the merger. That's higher than the $18 billion value put on the deal when it was announced.

He included values for Lycos, USA Network, Home Shopping Network, Home Shopping Network Online [which hasn't been launched yet], First Auction, and Ticketmaster Online-CitySearch.

Other portals still rely mostly on ad revenues and, with the exception of America Online have not used television well, Conn said. USA Networks reaches 100 million U.S. households, covering 90 percent of total households and 50 percent of Internet users.

The new company will pull revenue from multiple sources, including e-commerce, auctions, ticket sales, advertising, and telemarketing. It also will have multiple brands, which Conn argued will be more effective than single brands like Yahoo or AOL.

Those strengths will position the new company for the coming convergence of TV, Internet, and transactions, a trend he expects to see emerge by 2000.

Conn said that last fall, as consolidation began in the ranks of top-tier portals, CitySearch began rethinking its portal-agnostic strategy and was in negotiations with several portals to offer a local channel. But those portals wanted to limit how much CitySearch could offer.

So instead he retracted CitySearch's IPO filing in August to merge with Ticketmaster Online. The merged company went public October 1.