Terra Lycos Merger
Charting the future of public relations
Holmes Report
CEO

Terra Lycos Merger

On May 16, 2000, Lycos, Inc. announced its alliance with Terra Networks SA, the Internet arm of Spanish giant Telefonica, and in effect, its plans to become an unparalleled global Internet powerhouse.

Paul Holmes

  On May 16, 2000, Lycos, Inc. announced its alliance with Terra Networks SA, the Internet arm of Spanish giant Telefonica, and in effect, its plans to become an unparalleled global Internet powerhouse.
 
Prior to the merger, neither of the two companies was considered within the top-tier of Internet portals throughout the world.  Terra Networks, while number one in wireless content in Spain, only had a strong market position there and in Portugal and Latin America.  Lycos, considered among the second-tier of Internet portals, had a firm position in the United States, Asia and Europe, but lacked a real presence in the Spanish-speaking marketplace. 
 
Further complicating the situation was Lycos’ highly-publicized failed merger with USA Networks a year prior, which caused many to see Lycos as a bit player in the Internet world.  In addition, just a little over a month after the merger was announced, Telefonica Chairman Juan Villalonga resigned amidst controversy, causing rumors to develop about whether or not Lycos’ merger with Terra Networks SA would take place at all.
 
OBJECTIVES
 
Weber Shandwick Worldwide embarked upon a strategic communications and aggressive media outreach campaign designed to position newly-formed Terra Lycos as the Internet portal with the largest global breadth and most advanced wireless platform.  Ultimately, Weber Shandwick set out to spotlight the complementary content and geographic strength created by the deal, while taking the edge off the negative backlash that resulted due to the failed USA Networks merger and Villalonga’s resignation. 
 
AUDIENCE
 
Weber Shandwick worked to elevate awareness of the value created by the Terra Lycos deal among key business and financial media, as well as shareholders.
 
RESEARCH
 
Weber Shandwick researched recent merger activity coverage by journalists and the media, as well as where Terra Lycos stood in respect to its competitors.  The research objective was four-fold:
  • Understand the challenges facing Terra Lycos in carving out a niche in the global marketplace;
  • Understand the issues surrounding the merger that would be of greatest importance to keyjournalists and editors at media outlets nationwide;
  • Understand the major “players” in merger-related coverage;
  • Gain a competitive advantage among other Internet players in overall media strategy development.
 
Part 1: Where we stood:  With Lycos and Terra Networks both seen as second-tier Internet portals, we needed to communicate the leadership position created by the merger.
 
Part 2: What we needed to do: A media audit of key business and financial journalists uncovered that there was little awareness of the competitive advantage created through the merger with Terra Networks.     This research guided our communications strategy and led us to create a strategic communications platform highlighting the logistics of the merger and the future plans for Terra Lycos.
 
PLANNING
 
Weber Shandwick worked to develop Lycos’ media strategy plan far enough in advance to gain a competitive edge.  The overall program was based on the following components:
  • Developed and executed an integrated communications program to build upon the strengths of Terra Lycos with emphasis on the convergence of telecomm and the Internet;
  • Diversified the company’s communications with key audiences to include media, speaking engagements and conferences;
  • Implemented regionally targeted media relations initiatives designed to increase awareness of the company in target markets;
  • Scheduled interviews with influential media outlets to begin establishing Terra Lycos’ CEO, Bob Davis, as the key spokesperson for the Internet industry and thereby indirectly positioning Terra Lycos as “the” leader in the crowded Internet playing field;
  • Drafted press releases and scheduled series of interviews for Bob Davis surrounding the Juan Villalonga resignation in an effort to re-affirm Company commitment to the transaction.
 
STRATEGY
 
To meet these objectives, Weber Shandwick developed a proactive strategic communications platform, designed to minimize journalist’s focus on the failed USA Networks merger and Villalonga’s resignation and place the positive aspects of the Terra Lycos merger top-of-mind among investors and key media.
 
EXECUTION/TACTICS
 
Weber Shandwick seized every opportunity to reach finance/business editors across the country with the core message of being a global Internet powerhouse. Weber Shandwick utilized the following vehicles to communicate this message:
  • A press release officially announcing the Terra Lycos merger;
  • A global press conference announcing the merger, transmitted via Web cast and satellite;
  • A series of corporate earnings releases, outlining Lycos’ profitability;
  • An intensive media relations program designed to inform reporters and keep them up-to-date on issues and events notable to Terra Lycos;
  • A press release series announcing the official close of the transaction.
 
OBSTACLES
 
Weber Shandwick needed to deflect attention away from the controversy surrounding both the failed USA Networks merger a year prior and Villalonga’s resignation, while still informing media and shareholders of the global media and communications giant created by the merger.
 
EVALUATION OF SUCCESS
 
Without question, Weber Shandwick’s campaign served to highlight the unrivaled global reach of Terra Lycos, spotlighting the convergence of new and old media and access and content.  Through a series of strategic initiatives, Terra Lycos was able to seize the media spotlight and be known as an industry leader that not only will dominate the industry, but also streamline the consumer experience.
 
As a result of Weber Shandwick’s ongoing media campaign, Lycos garnered coverage in top-tier outlets including USA Today, The New York Times, BusinessWeek, CNBC, CNN and CBS MarketWatch, Forbes and The Economist
 
The results speak for themselves.  USA Today reported that Terra Lycos “has the potential to take on the America Online/Time Warner media goliath.”  The Boston Globe headlined a story on Lycos titled “An End Run Around the Internet Giants.”  BusinessWeek, in its May 29, 2000 feature story on the merger, stated “Terra Lycos could dominate Latin America, be a strong player in Europe, and grab a nice slice of the U.S. Hispanic market while bolstering Lycos’ market share with greater investments in the brand.”  The Economist spotlighted Bob Davis and the Terra Lycos merger on the “Face Value” page of its October 28 – November 3 issue, stating that “if Mr. Davis’s record shows anything, it is that the biggest mistake is to expect too little of him.” 
View Style:

Load 3 More
comments powered by Disqus