WebMD scraps deals with NewsCorp and DuPont
WebMD will hand over The Health Network, a cable-TV network, to News Corp and will take a non-cash charge of $275 million for the quarter ending December 31. The WebMD-News Corp deal, which was signed in December 1999, is the latest WebMD deal to be scrapped. The company said it is re-evaluating a number of its partnership deals so that they make economic and strategic sense.
Like many other Internet companies, WebMD signed several big-money agreements last year to attract key partners and boost its revenue and stock price. In October, WebMD said it planned to renegotiate deals as part of its broad restructuring.
WebMD also has terminated its $220 million, five-year strategic alliance with DuPont (dupont.com). Under the original terms of agreement, which was signed in April 1999, DuPont was to provide healthcare content to WebMD's consumer and physician portals and sponsor subscriptions to its physician site.
Since the company announced its plans to restructure and focus on becoming an information technology company, providing software to doctor's offices and processing healthcare claims online, content-orientated contracts, like the one formed with DuPont are no longer viable.
No one inside or outside healthcare has found a way to make money using content, Michael Clulow, an Internet information technology analyst at UBS Warburg, told FT.com, the Internet arm of the Financial Times. The former management team entered into a series of bad contracts to basically get eyeballs for dollars.
The company is currently reviewing 100 contracts worth an estimated $130 million revenues.