If one multibillion-dollar Internet deal isn't enough for you, hang around a while. There could be more.
The $US4.2 billion handshake between America Online and Netscape Communications will put a lot of pressure on a lot of companies, most notably the so-called portal sites -- particularly Yahoo!, Excite and Lycos.
Faced with an online behemoth that has access to 23 million Netizens (14 million from AOL, 9 million from Netscape's Netcenter), those sites, which depend on clicks for their bread and butter, will be looking to sign deals with companies that can offer the same kind of promotional and monetary backing as AOL.
Consolidation stampede expected
"Just like we've seen in the banking world, this is likely to set off consolidation, either among the portal players or between media partners and portal players," said Scott Smith, director of Internet commerce at Current Analysis in Virginia.
Outright acquisitions were viewed as unlikely by many analysts, who noted the sky-high valuations of the Internet companies.
As of the close of business Monday, Lycos had a market capitalization of $US2.7 billion and Excite was worth $US2.6 billion -- Yahoo! stood at an almost unbelievable $US20.7 billion.
What's more likely, analysts say, is the companies will partner up with each other or with a major media firm, echoing the relationship between Infoseek and Disney.
But Disney's not the only media company to get into the Internet market in a big way. General Electric's NBC division recently acquired part of CNet's snap.com portal site.
Yahoo!, Excite, Lycos to do a Snap?
"I don't think this will force any mergers, but I've felt for a while that Yahoo!, Excite and Lycos could all use major media partners, at a minimum in the same way that Infoseek and Snap have partners," said Adam Schoenfeld, a vice president at Jupiter Communications in New York.
"AOL and Netcenter together have major promotional muscle. The deal-making between those portals could accelerate, and that could potentially involve a major media company trying to buy one of them."
Indeed, several media companies have been rumored to be shopping for some time, including Time Warner, The News and CBS.
A spokeswoman for Excite said the company was always willing to talk, "and if the right deal came around we would consider it."
But she added that Excite might be the best-positioned of the portal players, since it currently has deals with both AOL and Netscape to provide search services.
"[There is] a long-term concern there, but right off the bat it creates a [fight] between Microsoft and Netscape. That's really where the head-to-head battle will be," she said.
Others agreed that the deal does present a significant barrier to anyone trying to make a break into the portal market, including Microsoft, which has been slowly pulling together its MSN strategy.
