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Disney Keeping Go.com Because of Low Expenses

Internet: Portal won't sell ads, won't be promoted, but negligible costs save once-hyped brand.

March 15, 2001|KIM CHIPMAN | BLOOMBERG NEWS

Walt Disney Co. said its decision to keep the Go.com search directory, reversing an earlier plan to close the site, is a low-cost move that could wring some value from the much-promoted brand.

Go.com has been overhauled several times since Disney introduced it more than two years ago as part of an attempt to capitalize on a booming Internet market and compete with portals or search engines such as America Online Inc. and Yahoo Inc.

The site's costs will be negligible because no extra employees or upkeep are needed, spokeswoman Michelle Bergman said. Go.com, which will act as a gateway to Disney-owned Web sites such as ESPN.com and ABC.com, won't sell advertising and won't be promoted anymore. That has some analysts questioning Disney's motive in keeping Go.com alive at all.

"I don't understand it, after making such a big deal about shutting it down and telling people on the site this won't run forever," Jupiter Media Metrix senior analyst David Card said.

Disney said two months ago that it would close the site and fire 400 workers as part of a plan to fold its separately traded Internet business back into the company.

The decision doesn't affect the previously announced firings or charge of about $790 million that Disney expects to take in the fiscal second quarter to write off intangible assets at Go.com, Bergman said.

Disney introduced Go.com with much fanfare at a New York event that included dance music, confetti and Disney Chairman and Chief Executive Michael Eisner. The site was heavily promoted across Disney-owned properties such as the ESPN cable channel and ABC television network.

After Go.com failed to achieve the success of Yahoo or America Online, Disney changed gears and focused Go.com on entertainment instead of trying to be a general-interest Web portal.

Finally, after trying to promote Go.com through a national advertising campaign late last year, Disney announced plans to scrap the portal and focus on its group of individual sites such as Disney.com.

The latest version of Go.com, which quietly went up last week, uses GoTo.com Inc. to provide Internet searches. Terms of the alliance weren't disclosed.

Some industry observers say Disney would be better off cutting its Go.com ties and focusing on building its existing sites.

Go.com "isn't going to create any additional value for Disney with consumers or marketers," said Chris Charron, an analyst at Forrester Research Inc. "The decision to shut down was a good one. It signaled that Disney would be moving in some new directions."

Disney should focus on building the commerce capabilities of its family and sports sites because that's how traditional media companies eventually will make money from the Internet, Charron said.

"It's about more than simply the content," he said.

Others said that keeping Go.com running, as long as the cost is minimal, doesn't hurt.

"Someone probably looked at it and said, 'We spent a lot of money and time on this, and there's value here we can extract at a much lower cost base,"' said Jeffrey Vilensky, an analyst at Bear, Stearns & Co. who covered the separately traded Walt Disney Internet Group. Disney now plans to combine the unit, which included Go.com, with the parent company.

"People have definitely heard of Go, although there's been so many rounds of changes that people probably don't understand what it is or what to do with it at this point," Vilensky said.

Disney Internet Group was the seventh-most visited group of Web sites in February, according to Media Metrix. About 20.9 million unique visitors went to the sites during the month.

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