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January was not kind to online news sites and portals, beginning and ending with layoffs and closures.
The latest casualty was The Walt Disney Co.s long-struggling Internet portal, Go.com. Last week, the parent company shut down the operation and eliminated 400 employees, most of them located in Sunnyvale, Calif.
Disney will align its Web sites and related commerce businesses with its other media and entertainment businesses, said officials of the Burbank, Calif., company. The Walt Disney Internet Group will continue to operate under its current management structure as a business unit of Disney, officials added.
Disney will continue to operate a streamlined version of Go.com and support the sites Infoseek search engine, acquired from Infoseek Corp. in 1999, for a period of time to allow users to make a transition, officials said. Disney plans to transfer some of Go.coms content and services to other sites and may sell the search engine and its site traffic.
Analysts attributed the closure of Go.com to its continued financial losses; consolidation in the portal market, in which there is room only for America Online Inc., Yahoo Inc. and Microsoft Corp.s MSN.com; and the recent slowdown in Internet advertising.
“Disneys closure has much less to do with softness in the advertising market and much more to do with the lack of focus, lack of a value proposition that Go.com had or could provide to consumers and advertisers,” said Chris Charron, an analyst with Forrester Research Inc., in Cambridge, Mass. “Advertisers found they could get more focused, valuable customers elsewhere.”
“Disney ran out of patience,” said David Marks, an analyst with Gartner Dataquest, in San Jose, Calif. “Why try to create a whole new Internet identity when they already have good brand names on the shelf? There hasnt been a huge demand [for Go.com] from consumers.”
Both agreed that, with Disneys current emphasis on its established and well-recognized vertical brands, the company is moving in the right direction.
Disney also announced that it will convert all outstanding shares of The Walt Disney Internet Group common stock into 0.19353 of a share of Disney common stock on March 20. This is expected to result in about 8.1 million new shares of Disney common stock.
The Walt Disney Internet Group will continue to operate Disney.com, DisneyAuctions.com, DisneyStore. com, DisneyVacations.com, Family. com, ESPN.com, NFL.com, Soccernet.com, ABC.com, ABCNews. com, ABCSports.com, Mr. Showbiz, Movies.com and Wall of Sound. The division also produces enhanced TV telecasts in conjunction with select ABC TV and ESPN programming.
Disney created Go.com when it acquired Infoseek in November 1999 and revamped the Web site last October to focus on entertainment, recreation and leisure.
Disneys Go.com is only the latest casualty in the world of online news and portals. Last month, Excite@ Home laid off 250 employees, or 8 percent of its work force; AltaVista Co. cut 200, or 25 percent; NBCi cut 150, or 30 percent; CNN News Group cut 400, or 10 percent; New York Times Digital cut 69, or 17 percent; and News Digital Media shut down and cut 200.