Media giant Walt Disney Company is to close its troubled web portal Go.com and refocus the group’s internet efforts on individual sites.
Disney’s web operations, which include ESPN.com and Disney.com, will continue to be managed collectively, but as part of the broader Disney corporation.
The company will absorb Go’s tracking stock Disney Internet Group by purchasing the 29% stake it does not own with 8.1 million Disney shares (worth around $250m). It will also write off about $790m in intangible assets and lay off around 400 staff.
Go failed to challenge the supremacy of Yahoo! and others as a portal/search engine, suffering a decline in online advertising as well as fallout from the implosion of technology stock values.
Explained Disney chief executive Michael D Eisner: “The advertising community has lost faith in the internet and specifically in portals. We were waiting for something at the end of the rainbow that was looking less and less worth waiting for.”
He added that it was not even worth sticking it out until the online ad market picks up, since Go would not benefit. “Seventy percent of the advertising for portals is going to the top three players,” he complained. “The ten second-tier portals are left picking up the scraps.”
Disney Internet Group chairman Steve Bornstein, the man many believe to be behind the changes, warned observers not to “misjudge our actions” as a retreat from the online world. Instead, he stated, Disney was focusing on its strengths on the web. In particular, ESPN.com is nearing a break-even point, while Disney Stores’ online arm is steadily increasing its sales.
News source: Wall Street Journal; New York Times