Mouse gets going

Disney, NBC 'Net aims surge after upgrade

Shares of Disney Internet arm and new media portfolio NBCi surged as high as 28% Tuesday as analysts upgraded the stocks on predictions of how the major entertainment players would perform over the next year and as the ‘Net and TV converge., which oversees all of Disney’s Web efforts, including the portal of the same name plus, and, rose $6.13 to close at $28, a gain of 28%. Company parent Disney ended the day trading up slightly at $28.44.

Shares of NBCi rose $14.25 to close at $93.25, a gain of 18%, after hitting its high-point of $68 last week. Parent General Electric was boosted $4.55 to close at $157.81.

Movin’ on up

The performance was attributed to a report released by Arthur Newman, an Internet and media analyst with Schroeder & Co. in New York, that raised to a “buy” rating from “neutral,” saying the stock was poised for a turnaround. He also raised his 12-month price target to $33 per share.

Since bowing at $37.50 on Nov. 18, has lost more than 40% of its value, heading into trading Tuesday.

“To some extent, these companies have had the same problem: They both constructed complex deals,” Newman said. “Now we’re seeing, in the case of, that management is articulating their strategy and executing on it.”

Slow starters

Investors have been discouraged over the financial performance of new media stocks that have IPO’d from the major studios or networks. lost more than $1 billion in 1999.

The November Media Metrix numbers gave Newman comfort in that Disney has succeeded in driving its offline audience to its Internet properties, which has helped the Go Network remain stable as the fifth-most-popular Internet portal.

NBCi, whose properties include Snap, and, among others, has ranked consistently as the No. 7 combined site in terms of mass market reach. is No. 1.

While calling a “long-term survivor,” Newman would make no predictions as to when its turnaround into profitability would occur. He said the company is likely to remain in an investment mode throughout its current 2000 fiscal year, spending more money, possibly on branding to get its traditional TV auds to recognize its online brands and acquire other properties for when convergence of the two mediums occur.


But Newman is optimistic that Disney, which controls 72% of the company’s outstanding stock, will leverage its portfolio of Web sites through promotions, content and ad sales to bathe in black ink.

“While management may not yet be moving in Internet-time, frustrating some investors, our impression is that they still get it, recognizing the need for material changes from the manner in which the predecessor companies operated,” Newman wrote regarding

NBC Internet was formed in November through a three-way merger that combined online direct marketer, NBC’s Internet properties and under one banner.

MTV Networks announced Monday it has created similar banners with its MTV music and Nickelodeon’s Internet fare for adults and children, positioning them to be spun off as publicly-traded companies sometime in 2000.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Digital News from Variety