Bronfman Praises Potential of Lycos Deal

Seagram Co., which owns about 45% of USA Networks Inc., is hopeful that investors will realize the long-term potential of USA Networks’ proposed purchase of Lycos Inc., Chief Executive Edgar Bronfman Jr. said. Bronfman’s comments came a day after Lycos’ biggest shareholder, CMGI Inc., said it won’t vote for USA Networks’ acquisition of the No. 3 Internet search directory at current stock prices, jeopardizing the transaction. The Seagram chief executive suggested that investors were valuing Internet stocks such as Lycos at unrealistic prices. Prior to Tuesday’s announcement, Lycos was “trading at an about $7.5 billion market cap with about $75 million in revenue,” Bronfman said. Lycos Chief Executive Robert Davis is a “smart guy who recognized his stock was sitting on vapor and he couldn’t sustain that multiple--and that he needed a real business,” he said. Seagram, which could have vetoed the transaction, “very much” supports the combination, Bronfman said during a speech in New York. Under the agreement, USA Networks would combine its Home Shopping Network unit and its stake in Ticketmaster Online-CitySearch Inc. with Lycos. USA Networks would control about 61.5% of the new company, while current Lycos shareholders would own about 30%.