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October 6, 1998

LYCOS BUYS WIRED DIGITAL FOR $83M

By CBR Staff Writer

The quintessential new media company of the early 1990s, Wired Digital has now succumbed to the consolidation in the portal industry of the late 1990s, when it agreed to be acquired yesterday by Lycos Inc for $83m in stock. The main assets Lycos wants is the HotBot search engine and commerce site, and the Wired News service. According to Lycos chief executive Bob Davis it gives Lycos three of the top ten web sites visited on the web and he says, I don’t believe any of our competitors owns more than one. Lycos claims that according to Media Metrix figures there is only about 20% overlap of visitors to its existing site and Wired’s,. Davis also says that users buy more goods and services from HotBot than from any other content site. This is a difficult statistic to confirm as portal companies don’t really break down such figures. HotBot gets around five million unique users a month, according to RelevantKnowledge. The two companies were tight-lipped on terms of the deal, other than to say that Lycos will cover Wired Digital’s cash pile on the closing date with an additional amount of stock. Davis would not comment on whether or not Wired Digital turns in a profit, but he says it will add $15m to $20m to Lycos’ revenues this fiscal year. The company will be issuing new stock for part of the transaction, but Davis declined to say how much would be issued. Wired Digital will continue as a separate Lycos unit, based in San Francisco under the leadership of the current president, Beth Vanderslice. Along with HotBot and Wired News, the acquisition gives the Waltham, Massachusetts-based company the HotWired, WebMonkey and Suck.com content sites. Wired Digital’s paper cousin, which was sold to Conde Nast earlier this year, was always a separate legal entity, says Vanderslice. Wired News retains its exclusive royalty-free right to some of the Wired magazine content. It also owns the wired.com domain and looks after the magazine’s website at wired.com/wired, she says. Lycos will still continue to take news feeds from the likes of Reuters, Ziff-Davis and CMP, says Davis. He claims the Lycos strategy is that of a classic media company, acquiring different brands and forming them into a network. Since the start of this year, Lycos has acquired the Tripod online community (02/04/98), the WhoWhere/AngelFire web directory and email provider and community (08/12/98) and the GuestWorld online guest directory (08/05/98) for just short of $200m in stock. Asked if the Lycos network is trying to emulate Zapata Corp, the fish oil company that is trying to assemble a portal at zap.com by buying content providers, Davis says Zapata is aggregating not so good sites. Zap.com has come to be seen as an old media answer to a new media problem of how to assemble content and present it. Lycos shares closed down $1.8125, or 5.7% at $30.125.

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