[email protected] To Establish Tracking Stock For Media Assets

In an effort to eliminate confusion over its strategic path, [email protected] Corp. will establish a tracking stock for its Internet media assets.

The action will separate the Redwood City, California-based company’s Internet portal assets from its subscription service, which offers high-speed Internet access over cable-TV systems. A separate board of directors is expected to oversee the new tracking stock, although little else is expected to change in the management or ownership of [email protected]

The move is also intended to raise capital to grow the company’s media assets.

Ending The Confusion

Since January, when [email protected] was created by the merger of high-speed Internet service At Home and Web portal Excite, Inc., potential conflicts for investors and competitors have been impediments to the company’s smooth operation. The murkiness only deepened when AT&T entered the picture by buying 26 percent of [email protected]’s common shares and 57 percent of its voting stock.

That stake, however, did not give AT&T majority control, because a complex set of corporate bylaws allowed other major stakeholders such as Cox Communications, Inc., Comcast Corp. and Cablevision Systems Corp. to exercise substantial authority.

Therefore, the creation of a tracking stock is seen by many industry observers as a perfect way to end the confusion surrounding the operation of [email protected], which needs to be flexible if it hopes to compete with competitors such as Yahoo! and AOL.

“As we rapidly approach one million subscribers and set our sights on the next milestone of 10 million, we have a wealth of expansion opportunities both in the subscription and media businesses,” said Tom Jermoluk, chairman and CEO of [email protected] “This structure will allow us to simultaneously drive the growth and valuation of each of our businesses in complete alignment with our partners.”

C. Michael Armstrong, chairman and CEO of AT&T, added, “This structure will allow [email protected] to aggressively build its media business independently while working with AT&T and its other cable partners to drive the deployment of broadband services to consumers.”

Stock To Be Issued Next Year

[email protected] intends to issue common stock that will track the economic performance of its media business, which includes its narrowband portal, broadband portal with its associated exclusive broadband distribution rights, and advertising and targeting services.

The company expects the tracking stock to be distributed on a pro rata and tax-free basis to all [email protected] stockholders.

Nonetheless, the establishment of the tracking stock is subject to further tax analysis, the completion of the definitive terms of the tracking stock, and stockholder approval. [email protected] expects to issue a proxy statement describing the tracking stock in the first half of 2000 and distribute the tracking stock during the third quarter of that year.

Meanwhile, shares of [email protected] (Nasdaq:ATHM) closed up 2 1/8 at 51 5/16. Its 52-week high is 99, and its 52-week low is 24.62.

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