WebMD to End 2 News Corp. Ventures

WebMD Corp., an Internet health information company that has lost more than $2 billion, will take a $275-million charge in its fourth quarter to end two ventures with Rupert Murdoch’s News Corp.

News Corp. will take back WebMD’s 50% stake in the Health Network cable channel, drop plans to promote the Internet company overseas and reduce advertising and promotion services for WebMD to $205 million from $700 million over 10 years.

WebMD changed management after its shares lost three-quarters of their value last year and is scaling back its consumer health Web site to focus on providing software and electronic processing of health insurance claims. Company officials previously said they expected fourth-quarter charges as WebMD reviewed partnerships.

WebMD shares fell 31 cents to close at $7.63 on Nasdaq. News Corp.’s American depositary receipts, each representing four ordinary shares, were unchanged at $32.25 on the New York Stock Exchange.

Marty Wygod, who took over as sole chief executive with the resignation of co-CEO Jeffrey Arnold in October, has said the company is shedding relationships based on their profitability, strategic relevance and revenue potential.

“These deals were struck when the Internet hype was at its pinnacle, and I don’t think people were concerned with how you would execute them,” ING Barings analyst Ruby Holder said. “Marty is just trying to clean the slate as quickly as possible.”

Last week, WebMD ended its revenue-sharing agreement with DuPont Co. It is also renegotiating marketing partnerships with Microsoft Corp., America Online Inc. and Quintiles Transnational Corp., analysts have said.

“This was absolutely instigated by WebMD,” Lehman Bros. analyst Robert Rouse said. “They are going through all their alliances and reevaluating every one. They did 80 alliances and acquisitions in an 18-month period. It’s impossible to focus a company with that much noise going on.”

As of Sept. 30, WebMD had $820 million in cash and expects to have $1 billion by the end of this year, company spokeswoman Risa Fisher said.

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Web Ailment

As it continues to strive for profitability, WebMD is continuing to streamline its business. Last year, its shares lost three-quarters of their value, and they are off 88% from their 52-week high of $75.19.

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WebMD (ticker: HLTH), weekly closes and latest, on Nasdaq.

Tuesday: $7.63, down 31 cents

Source: Bloomberg News