The demise of USA Networks-Lycos could hurt more than you think.
Three months ago, executives of Lycos Inc. (Nasdaq: LCOS) said a merger with the Home Shopping Network and Ticketmaster-CitySearch would create a business with far more potential than Lycos Inc. (Nasdaq: LCOS) could ever achieve on its own. Now, with the controversial plan having faded into the ether, Davis insists that a USA-less Lycos can be as strong as ever. "This deal (with USA Networks) wasn't done out of necessity, but out of opportunity," Davis said today. "This deal would have put us ahead of the marketplace."
| Happy to see the demise of USA-Lycos or no? |
That statement implies that Lycos is now just another player, which is hardly encouraging, despite the stock's 10 percent gain today. Though Davis did his best to put a brave face on events, his voice gave the impression that he would have rather airdropped onto a field of poisoned spikes instead of talking to reporters about a shattered deal. If Davis had rushed through his opening comments any more rapidly, he would have sounded like a tape of JFK on fast-forward.
Of course, anyone with even a smidgen of sense would rather do anything than talk to journalists. And Davis usually speaks quickly anyway. In any case, the failure of USA Networks-Lycos shouldn't be that painful to Davis.
After all, Lycos is already the most visited property of any Web portal not owned by AOL or Microsoft. "I am the number one destination on the Web amongst the portals today," he declared. "Nobody has a greater audience than I do today." ("I am", "I do" -- You ever get the feeling that Davis takes things personally?)
Even better, Lycos still you'll still be able to watch that Search Engine dog "go get it" in between reruns of "Xena: Warrior Princess" and "Walker, Texas Ranger". Event tickets will still carry the Lycos logo. And the Lycos website will still feature entertainment content from Ticketmaster.
That is, Lycos gets the promotion it was looking for anyway, without having to give up any stake in the company. In fact, the failed merger itself turned out be one of Lycos' best acts of self-promotion.
"Our brand awareness is at levels higher than it ever was in our company history," Lycos CEO Bob Davis told reporters. "And I guess we have all of you to thank for that."
But decisions based on "opportunity" instead of "necessity" sometimes turn out to have been necessary after all. Just recall PointCast, which this week accepted a buyout that by all accounts is a mere pittance of the $450 million it rejected from Fox a few years ago.
Although Lycos does get the cross-promotion it wanted, the company will stil lose its number ranking the moment Yahoo completes its acquisition of Geocities, and the gap will grow even more when the Broadcast.com purchase wraps up. And it's not like Yahoo doesn't do some heavy TV advertising of its own.
More discouraging, Lycos loses the e-commerce engine it was hoping to acquire with The Home Shopping Network. There aren't many alternatives out there to that.
Today's announcement doesn't calm the market down any. Speculation about the next potential acquirer is already surfacing, and Davis did nothing to quench that when he mentioned that Lycos becomes eligible for "pooling" type deals in the fall. Davis painted that as an opportunity for Lycos to do more acquisitions, but everyone else looks at it as another chance for a Lycos buyer.
Life would have been a lot easier if Diller had just redone the deal on slightly sweeter terms.
Overall, technology stocks managed positive gains in the face of industrial blue chip weakness. The Nasdaq Composite Index was up 23.44 to 2590.12, the S&P 500 had gained 1.30 to 1356.91, and the Dow Jones Industrial Average had slid 53.27 to 10972.88. 22GO>