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Mouse bugs out of portal biz

Disney is pulling the plug on its troubled Web portal and slashing 400 jobs after sustaining back-to-back billion-dollar annual losses on the project.

Even for deep-pocketed Disney, the pain of its pet dotcom creation became too great to resist the inevitable. The portal lost approximately $1 billion in each of 1999 and 2000. A Disney Web group spokeswoman could not confirm a report that the mouse will make a $790 million write-off of the portal Shares of will be converted to shares of Disney, with each share traded for two-tenths of a Disney share.

No word on what happens to the Infoseek search engine that powers the portal. All of the principle existing Web sites that were part of the portal remain, including,,, and Mr. will remain up and running.

Those are the successful fruits of the Disney Internet Group's efforts to date, although most of their seeds were planted before the Web unit existed. What Disney describes as a "streamlined" version will continue to exist for a while longer, as some of its features are moved to other sites.

In a prepared statement, Steve Bornstein, chairman of the mouse Web group, expressed his "regret" at the impact the closure would have on his unit's workers. "Our ultimate objectives are to be highly competitive and profitable, and we believe this is the decision me must take in order to achieve those goals," he added.

Absent from prepared comments from Bornstein and his boss, Disney honcho Michael Eisner, was any actual explanation for putting the kibosh on But the steady red ink is documented, and the reasons are obvious.

Industry observers have long questioned the wisdom of the strategy both Disney and NBC have followed in creating portal plays to essentially aggregate and promote their own content. Both and NBCi have consistently occupied an outer ring of portal players clearly peripheral in their appeal to the most popular Web entry points such as and NBCi continues to limp along, but has made two successive moves to cut staff in recent months, and will eventually cut its work force in half.
- Richard Tedesco