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Disney buys stake in Web site operator, launches ABC online service

April 4, 1997

NEW YORK (AP) _ Walt Disney and ABC News will launch an online news service to compete against similar offerings from MSNBC, CNN and USA Today.

Walt Disney, which owns ABC, said Thursday that it had bought a ``significant″ stake in Starwave Corp., a Web site operator, and will run its daily operations in producing ABCNEWS.com. Terms were not disclosed.

It is another aggressive move onto the Internet for the Burbank, Calif.-based Disney. The company announced Monday that it will launch a Web service for children and families called Disney’s Daily Blast.

Starwave, based in Bellevue, Wash., has been praised for its creativity in designing Web pages but criticized for loose management.

Among the Internet sites Starwave operates are ESPNet-Sportszone, the NBA.com pro basketball site, the NFL.com pro football site, the Nascar Online auto racing site, and Mr. Showbiz, a site focusing on celebrities, movies, and television shows.

ABCNEWS.com will be available to America Online and Netscape users. Netscape will create a special ABC News headline element on its home page.

The online service would become an immediate rival to MSNBC’s, a joint online venture of NBC and Microsoft. It also will go up against news services from USA Today and CNN.

``It’s going to be a very interesting battle,″ said Steve Mitra, an analyst of online content at Jupiter Communications.

Disney had its eye on the Internet when it decided last year to pull the plug on ABC’s plans to launch a cable television news channel.

``We don’t want people to just read about the news. They can do that anywhere,″ said ABC News chairman Roone Arledge. ``We want them to be able to hear it, feel it, interact with it and use the technology to help them understand how it applies to their lives.″

Earlier this week, MSNBC announced changes to its Internet service that would allow computer users to create a personal news report and have news sent by electronic mail.

Disney and Microsoft may now be competitors in the online news market, but that hasn’t stopped them from working together in other ventures. The Microsoft Network was given an exclusive deal this week to offer Disney’s Daily Blast for free to its members over the next 10 months.

Starwave’s founder, Paul Allen, will remain the company’s largest shareholder and holds an option to sell his interests to Disney after five years. Allen co-founded Microsoft with Bill Gates in 1975.

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