And Now for the Competition

Yahoo: Yahoo Inc. is the perfect company for today's narrowband world. It's No. 2 in traffic to America Online Inc., racking up e-commerce and ad revenue of $203 million in 1998. But broadband is a different story. Speculation has Yahoo gobbling up a TV network or aligning with a broadband firm to prepare for that bold future. With a $120 billion market cap, Yahoo has the heft to buy most anyone. But CEO Tim Koogle has sworn to keep Yahoo independent. How to explain, then, the company's filing last week to sell an additional 750 million shares? Bear Stearns analyst Scott Ehrens believes it "signals Yahoo's intention to consider a large stock-for-stock acquisition in the short term."

Walt Disney: The Mouse House's Web future lies with the Go Network, which, despite a clunky strategy, is rising to challenge Yahoo and AOL in visitors.

Its movie studios, TV assets (ABC and ESPN) and theme stores make it a pre-eminent consumer media brand, with $22.98 billion in 1998 revenues. But with its stock stagnating, shareholders are restless for CEO Michael Eisner, a big Net proponent, to make a move. Like Yahoo, it may need a broadband partner.

Microsoft: Bill Gates is sending mixed signals. The company is reportedly scaling back its media operations, including the MSN portal. But it's heavily investing in cable: $1 billion in Comcast and $5 billion in AT&T, plus others.

The cable alliances will help to keep Windows, which generated most of Microsoft's $19.75 billion in sales last year, an integral part of next-generation media devices like digital cable set-top boxes and wireless Web gadgets. The ongoing antitrust case should keep it from making any big acquisitions.

News Corp.: Rupert Murdoch's roost has been banking on a media future in which consumers crave wireless Web access and interactive TV. News Corp. has a movie studio, plus network and cable TV stations in the U.S., and vast overseas assets. Despite nearly $19 billion in fiscal 1999 revenue, News Corp.'s market capitalization is less than a quarter of Yahoo's. If it belonged to anyone else, it'd be a ripe merger candidate. But CEO Murdoch would never relinquish control.

Sony: The consumer electronics giant, with fiscal 1999 revenue of $56.6 billion, has been quietly building an online empire. In music alone, it holds stakes in Listen.com, OnRadio, Spinner.com (co-owned with AOL), Launch Media and Platform.net. But autonomous divisions mean Sony is more fractured than focused. The glue that could bring it all together: video games, which in 1999 accounted for more than 10 percent of revenue. The new Play-Station 2 will serve as a hub for games, music and other digital entertainment, via broadband.

So Sony could be looking for a distribution partner.

Viacom/CBS: Before its proposed $36 billion merger with Viacom, CBS had been using advertising-for-equity swaps to build its Internet strategy. Post-merger, that strategy could flourish with a portfolio ranging from MTV and VH1 to the Nashville Network and the CBS broadcast network. But the myriad Internet holdings - from CBS MarketWatch to sweepstakes portal iWon - haven't amounted to a coherent strategy. Here's a start: CBS recently hired former Prodigy CEO Russ Pillar to run its Internet division. But as Viacom and CBS wait for the ink to dry on the merger, they may be wondering if their big plans are big enough.

General Electric: With MSNBC, CNBC and NBC proper, General Electric, which counted a staggering $100 billion in 1998 revenue, owns leading network and cable brands and their mildly successful Internet counterparts. Now there's NBCi, a conglomerate of NBC's Internet interests with Xoom.com and Snap.com, which drew a tepid reaction in its December Nasdaq debut. Making things messy are perpetual rumors (denied by CEO Jack Welch) that the network properties are on the block.

Bertelsmann: The day after the merger announcement, Bertelsmann CEO Thomas Middelhoff resigned from AOL Europe's board. The global publisher thought AOL Europe was its ticket to a flourishing Net strategy, but no more. Still, don't count it out. Bertelsmann has linked up with Seagram's Universal Music Group, AT&T and Matsushita Electric to develop an online music delivery system, and its books interests lie squarely with a 40 percent stake in Barnesandnoble.com.

But if Middelhoff is thinking titanic deals, he's got no currency - despite 1998 revenues of $14.7 billion, Bertelsmann is privately held - which means no equity to deal.

Miguel Helft contributed to this report.

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