# Excite@Home (1996 – 2001)

- URL: https://girisimcikafasi.com/en/startup-graveyard/excite-at-home/
- Sector: Telecoms
- Country: United States
- Total funding: unknown
- Cause of closure: Business model failed

## What did it do?

@Home Network was a joint venture set up in 1996 to deliver high-speed internet over the two-way infrastructure of cable television networks. In January 1999 it absorbed the Excite portal in a $6.7 billion merger and became known as Excite@Home. At its peak it served 4.1 million subscribers in the United States, Canada, Japan, Australia and the Benelux countries.

## Why did it shut down?

A profitable broadband network was combined with a loss-making search engine and portal, and costs ran far ahead of revenue. The merger was followed by expensive acquisitions such as iMall and Blue Mountain Arts; Blue Mountain was sold less than two years later for under 5 per cent of the price paid. The bursting of the dotcom bubble in March 2000 and the collapse of the online advertising market made fresh capital hard to find. As cash ran out in 2001, bondholders demanded immediate repayment of $50 million of debt, and Cox and Comcast announced they would leave the service. The company filed for Chapter 11 bankruptcy protection on 1 October 2001.

## The story

On 19 December 1998, encouraged by the venture capital firm Kleiner Perkins, Thomas Jermoluk, chairman and CEO of @Home Network, met Excite's CEO George Bell. Excite was in merger talks with Yahoo! at the time; the meeting ended instead with a decision for Excite to join @Home. The $6.7 billion merger, completed in January 1999, was one of the largest deals ever struck between two internet companies.

@Home had been founded in 1996 as a joint venture between Milo Medin, William Randolph Hearst III and cable operators such as TCI, Comcast and Cox. The aim was to turn the two-way infrastructure of cable television into high-speed internet. At its peak it served 4.1 million subscribers across the United States, Canada, Japan, Australia and the Benelux countries; in the first quarter of 1999 its shares hit $128.34 and its market value reached $35 billion.

The merger wedded a profitable access network to a loss-making search engine and portal. Excite@Home soon bought iMall for around $425 million in stock, and the e-greetings company Blue Mountain Arts for around $430 million in stock plus $350 million in cash. The new CEO worked from his home in Massachusetts, while the finance director flew in to headquarters from Los Angeles once a week. Costs ran far ahead of revenue, and the bursting of the dotcom bubble in March 2000, together with the collapse of the online advertising market, made new money hard to raise.

A $100 million financing package secured in June 2001 had to be repaid immediately if the shares were delisted from Nasdaq. In August bondholders demanded immediate repayment of $50 million of debt, and Cox and Comcast announced they would leave the service. In September Blue Mountain was sold to American Greetings for $35 million, less than 5 per cent of what had been paid for it. On 1 October 2001 the company filed for Chapter 11 bankruptcy protection; access to its national fibre network was sold to AT&T for $307 million, and the remaining 1,350 employees were laid off by the first quarter of 2002. The @Home brand lived on with partners in Japan and the Benelux.

Excite@Home shows that merging two strong businesses does not automatically create a strong company. Once an infrastructure business earning regular income from subscribers took on the risks of an advertising-dependent portal, the two went down together as soon as the market turned.

## Lessons

- Before merging a business that generates steady subscription revenue with a loss-making one that depends on the advertising cycle, stress-test the cash flow of each side separately.
- If your partners control your distribution channel, write down in advance what happens if they walk away, and your plan for it.
- Read the terms of easy money; early repayment clauses tied to your stock-market listing can sink a company fast in a crisis.

## Sources

- [@Home Network](https://en.wikipedia.org/wiki/@Home_Network)
- [Cable partners replace @Home with ease](https://www.cnet.com/tech/mobile/cable-partners-replace-home-with-ease/)
- [https://www.wikidata.org/wiki/Q4570714](https://www.wikidata.org/wiki/Q4570714)