German based media giant Bertelsmann, holding a 18% stake in Lycos.Europe, is likely to reduce it's commitment to the largest european portal.
Under a deal, closed in 2000, Bertelsmann would have to invest € 1,14 Bill. in form of content, services, ads, promotion between 2000-2005.
According to the Financial Times the lions share due over the next 3 years will not be invested in full.
This is bad news for Lycos.Europe. The company is under heavy pressure to reduce costs and grow revenues. With some success so far: Losses got halved, revenues were up.
A good part of the increased "revenues from e-commerce" however came from the above mentioned deal.
But Bertelsmann Boss Middelhoff, of we-buy-out-napster fame, has just explained in an interview, his company is planning to get rid of every Internet activity which is not profitable next year.
And he means it. Online bookshop BOL, second best in competition with Amazon, got merged to Bertelsmann book club, Infoseek got shut down, Hotbot will get shut [webmasterworld.com] down, Mediaways was sold.
Spanish ex state-owned telefon giant Telefonica, the second major shareholder of Lycos.Europe, would have to jump in, according to the contract, if Bertelsmann choses to reduce it's commitment.
This situation fuels speculations again on Bertelsmann selling it's stakes to Telefonica.
Either way - the future of Lycos.Europe does not look to bright. The aggressive growth throughout Europe was based on the partnership between the technical expertise from Terra Lycos/Telefonica with the content giant Bertelsmann.
If this marriage gets divorced, Lycos.Europe will hardly have a chance against the competition from AOL/TimeWarner and MSN. Even european players like Vivendi/Vodafone, T-Online/Springer or Tiscali might overtake Lycos.Europe, today's market leader.