Disney Buys Rest of Web Firm Starwave
A year after purchasing a minority stake in Starwave Corp., the Walt Disney Co. agreed to buy the rest of the Bellevue, Wash.-based firm from billionaire founder Paul Allen. Terms of the deal were not disclosed.
Starwave will become the core technology developer for the Buena Vista Internet Group, which is responsible for all of Disney’s Internet initiatives. No layoffs are planned.
Although the deal does not add new Web sites to Disney’s portfolio, it does signify the company’s commitment to expand its online ventures and make them profitable, said Jake Winebaum, chairman of Buena Vista Internet. Burbank-based Disney is one of the few companies that charge fees for some online content, and it collects revenue from online advertising, electronic commerce and content distribution deals as well.
Five-year-old Starwave was one of the first companies to develop advertiser-supported World Wide Web sites like Mr. Showbiz and ESPN SportsZone. In the last year, most of the company’s sites were linked to Disney through partnerships.
“The companies lived together before we got married,” said Starwave Chairman Mike Slade, who will become president of Buena Vista Internet.
Disney had five years to exercise its option to buy the remainder of Starwave but decided to act now because the two companies had developed a close working relationship, Winebaum said.
Starwave engineers will continue to develop software tools for database management, Web traffic analysis, advertising management and Web publishing. Such under-the-hood technology will help Disney expand its line of Internet products, Winebaum said.
The deal comes one day after Disney chief Michael Eisner told a gathering of business journalists, “We will be aggressively competing on the Internet. Being connected to everyone else in the world is the excitement of going into the next century.”
It may take until then for the firm’s Internet venture to turn a profit. Overall, the group is still losing money, although Winebaum said some parts of the business are profitable.
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Bloomberg News contributed to this report.
