Internet giant's $5.7 bil Broadcast.com deal opens pic portal

Internet powerhouse Yahoo! has struck a deal to acquire ‘Netcaster Broadcast.com for a reported $5.7 billion in stock, positioning the Web portal as the leading distributor of audio and video, including movies, on the Internet.

The move into entertainment by a major Internet player has significant ramifications. As ‘Net broadcasting becomes more popular with consumers, independent producers will have entirely new sources for film financing and distribution.

The two online companies are expected to announce the merger today. Both companies’ boards met Wednesday to approve the deal.

As expected, (Daily Variety, March 23), Santa Clara-based Yahoo! will offer $130 a share for the 44 million outstanding shares of Dallas-based Broadcast.com, according to sources.

Both Yahoo! and Broadcast.com declined to comment on the deal.

Investors, however, embraced the news Wednesday, as shares of Broadcast.com shot up $4.81 to close at $118.19. Company reached a 52-week high of $144.75 in January before splitting its stock. Yahoo! dropped $3.94 to end at $168.38.

Shares of Broadcast.com jumped nearly $32 on March 22 after investors first learned that Yahoo! was interested in acquiring the online broadcaster.

Although distribution of films through the Internet may be years down the line, Yahoo! can expect immediate benefits from the Broadcast.com purchase. It has been trying to broaden its mostly text-based service through acquisitions such as Broadcast.com, which delivers audio and video programming ranging from presidential speeches and live sports events to Victoria’s Secret lingerie fashion shows on the Internet.

Broadcast.com offers access to more than 425 radio and TV stations and cable nets through its Web site.

In a move that adds films to its list of programming, Broadcast.com inked a deal with Trimark Holdings in February to begin screening at least 50 pics from Trimark’s library, including its “Warlock” and “Leprechaun” series, for free or pay-per-view.

Company is interested in pursuing other deals with film distributors, as well as possibly financing film productions.

About 8.9 million Web users visited Broadcast.com in February, according to Internet researcher Media Metrix. By comparison, 31 million — or 50% of all U.S. Internet users in February — used Yahoo!, the second-most popular site (after America Online) on the Internet, Media Metrix said.

Acquisition is expected to give Yahoo! an edge over rival Web portals, including Barry Diller’s Lycos (the second most popular search service, with 29 million visitors in February), Disney-owned Go Network and NBC’s Snap.com service.

Yahoo! still operates independently without a media partner.

The Yahoo! deal, with its financial backing, leads some observers to speculate that the onset of movie broadcasting on the Internet may be closer than many analysts think.

But the technology of video delivery methods must improve and be adopted by more consumers. High-speed broadband services such as faster cable modems and DSL phone lines, for example, though not in wide use now, can provide near TV-quality video.

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