Pop.com, IFilm Break Off Merger Talks

Pop.com and IFilm won’t be merging after all.

The parties broke off talks Friday after confirming two days ago that they were in advanced discussions to fold the unlaunched Pop.com Web site--founded nearly a year ago by DreamWorks SKG and Imagine Entertainment--into IFilm, an Internet portal and industry services company.

Industry sources speculate that a major deal-breaker was control and distribution of ownership of the merged company. Pop’s founders sense of the value of their company is “unrealistic,” said a business executive who once negotiated with Pop.

Officials at Pop.com and IFilm said Wednesday they expected to have a deal concluded within 48 hours.

But Friday morning, employees at IFilm received an internal e-mail from Chief Executive Kevin Wendle saying the discussions with Pop.com “have ended and have not resulted in a transaction.”

A spokeswoman for IFilm said the company had no comment, as did officials from DreamWorks and Imagine.

Wendle said this week that it was Microsoft co-founder Paul Allen, who is an investor in both Pop.com and IFilm, who had championed the idea of merging the two companies.

Many in the industry viewed the proposed merger of IFilm and Pop.com as a strange fit to begin with because the two companies appeared to be headed in opposite directions strategically and philosophically.

Pop.com’s focus has been on creating content for the Internet. When formation of the company was announced last year, the founders said that Internet users would flock to their site because the partners’ expertise and connections in Hollywood would enable them to produce superior programming.

IFilm, on the other hand, has steered away from content creation, which is expensive and slow to earn revenue, concentrating instead on serving as a “portal” to the content others put online. IFilm has also focused on developing Web-based tools--from databases to gossipy chat rooms--for Hollywood professionals.

Wendle “made a specific move months ago to say ‘we’re not a content provider,’ ” said David Bartis, co-founder of Nibblebox.com, a Santa Monica-based entertainment site. “It was looked on as a smart move. I don’t think he wants to be in the [content creation] business.”

The unraveled deal is the latest in a long series of aborted merger and acquisition talks for Pop.com, which has been involved in almost constant discussions with other entertainment sites since it was founded.

In recent weeks, for instance, Pop renewed discussions with AtomFilms.com, a Seattle-based site Pop had pursued more than a year ago. Mika Salmi, chief executive of AtomFilms, said the two companies “talked about terms” but quickly realized that the plans “weren’t going to work.”

Pop has had a history of raising expectations and not delivering on the hype. The site itself missed a number of launch dates; company founders initially planned for an unveiling last spring.

“I’m not completely surprised by this,” Salmi said of Pop’s collapsed merger talks with IFilm. Pop, he said, has “a history of making plans before they happen, leaking things out before they happen.”

Pop had also held serious merger talks with Z.com, founded by Internet incubator Idealab, but those negotiations also went south.

“There was nothing there so we passed,” said a source close to those discussions.