$56 million deal
WebMd to get Internet boost from Lycos alliance
By DON LONG
Healthcare InfoTech Managing Editor
In the current Internet scramble, WebMD (Atlanta), a developer of web information for physicians, is refusing to be left behind. Since the beginning of the year, WebMD has been on a rapid expansion and diversification pace, continuing it this week by agreeing to pay $52.6 million in a three-year deal to link up with Lycos (Waltham, MA), called the second-most-visited hub on the Internet.
WebMD will get a wide-reaching presence through promotion across a broad range of Lycos products, resulting in consumer and customer contacts at the "multi-billion-impression level," according to company officials.
And through separate alliances that Lycos is developing such as that proposed with USA Networks television properties the number of impressions it receives could reach into the several billions
Under the agreement, WebMD becomes the exclusive provider of all healthcare content, sponsorships, and e-commerce on the Lycos Network and will develop a co-branded version of its consumer health channel. Additionally, all Lycos Network properties will carry links to the co-branded channel.
The WebMD/Lycos co-branded Web site will integrate Lycos services such as e-mail, home pages and search; and members of both Lycos’ and WebMD’s communities will have access to the combined devices with a single registration.
WebMD said it also hopes to capitalize on the USA/Lycos Interactive Networks alliance still to receive shareholder and regulatory approvals. If approved, that alliance will provide what WebMD calls "cross-promotional synergies" across both the Lycos Network and USA Networks’ television properties. WebMD advertising and informational spots will be carried on the USA Network, The Sci-Fi Channel and Home Shopping Network, directing consumers and healthcare professionals to the co-branded site.
The two companies said they also intend to pursue expansion of the agreement to jointly create an e-commerce platform to provide health-related services and products to both consumers and physicians.
Jeff Arnold, chairman and CEO of WebMD, said in a statement that the alliance represents a major step for his company, since it is "first to take advantage of the planned on-air and on-line cross-marketing capabilities with Lycos and USA Networks. We look forward to delivering timely and comprehensive healthcare content to Lycos' nearly 30 million users, as well as USA Networks’ 70 million television homes."
Also as part of the agreement, Bob Davis, president and CEO of Lycos, will join the WebMD board of directors, and Arnold said his addition would bring "valuable insights on how to build and manage a fast-growing Internet company."
Davis said that Lycos was drawn to the alliance because of WebMD’s use of "the power of the Internet to access health professionals, and the resources and support communities they need. Our alliance with WebMD demonstrates the unmatched ability of Lycos to deliver totally integrated marketing capabilities."
WebMD has been working at diversification as well as integration, its deals in 1999 so far including an alliance with CNN News Group to exchange on-line content, brand promotion and advertising; the acquisition of Sapient Health Network, a free on-line information and support service, and Medical Knowledge, a web-based health information publisher; a deal with CompuServe to offer that Internet service to WebMD subscribers; and the acquisition of an equity interest in J&C Nationwide, a large medical professional staffing service.
Overall, WebMD now has developed 32 alliances for content, services and distribution. Among these are link-ups with McKessonHBOC, ENVOY, Medirisk, MedQuist/Transcription Services, DePuy Orthopedics, and Thomson Healthcare Information Company.
Launched late last year, WebMD offers Internet-based services for physicians, including a medical information library; a virtual office with real-time insurance verification and referral authorizations, unified messaging and telephone-based patient test results; customized Web sites for physician practices; competitively priced supplies and hundreds of continuing medical education courses.
It also offers a range of content and services on a separate consumer web site.
Founded in 1995, Lycos reaches 48.8% of Web users.
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