US Report: Net newcomer Zapata in bizarre bid for Excite

Started as an oil business in 1953 by former U.S. President George Bush, Zapata is now a holding company whose largest asset is Omega Protein, an American food processor company. But recently, Zapata has made a new name for itself by snapping up the Webzines, ‘Word' and ‘Charged' and taking out ads in the New York Times and Wall Street Journal blaring that "Zapata Will Buy Your Web Site." Last month, Zapata announced plans to reorient itself as an Internet player, with an initiative "to acquire and consolidate Internet content and e-commerce businesses". In addition the company said it would change its name to the more cyber-friendly "Zap".

The company's first step was to acquire the Webzines. The second step, buying Excite, might not have panned out but it still could help in the future. For one thing, the bid has raised Zap's visibility in the Web world.

Zapata CEO, Avie Glazer declined a request for an interview. His family, which also owns the Tampa Bay Buccaneers football team, reorganised the business in 1994 as a food processing company. That division went public in April, leaving Zapata with lots of cash but no core business.

"You could liquidate the business or go into a different segment," said Tim Raney, an analyst with Deutsche Morgan Grenfell in New York. "It is inherently interesting to do a [buy-up] of Web content. They look at it as not dissimilar from other ... strategies out there."

Raney compared the company to that of fellow NFL (Miami Dolphins) owner Wayne Huizinga, whose ventures include waste hauling and car rentals besides owning baseball's Florida Marlins and hockey's Florida Panthers. "Ideally, the assets you want to bring to the table include more than just cash. But that's kind of the MO of American business - buying your way in," said Gregory Wester, vice president at the Yankee Group in Boston.

But will that strategy work on the Internet, which has so far managed to confound cyber gurus as a profit-making engine?

Some companies have been successful at it, Wester said, pointing to Microsoft and Japanese firm Softbank (Softbank is the largest shareholder of ZDNN publisher Ziff Davis Inc.) "Can they play in the Internet market? Sure isn't everybody in it? Can they boost their knowledge of the market? Sure," Wester said. "But will they become a major player overnight? I don't think so."

Scott Baxter, CEO of magazine publisher, Icon said Zapata's move into media isn't such a sharp left turn. "People are talking fish-oil company goes to new media. What Zap became is a shell company with a lot of money that now has a focus on new media. It's a new entry into the market, not a change in focus."

He added that Zapata's growing interest in all things Internet should be taken as good news for the industry. "They're going to legitimise this industry and take it forward. To me it's brilliant what they're doing. They're not looking to build a company and sell it next week. They're building a solid company that will be worth a fortune one day.

The potential deal with Excite, however, made no sense to Regina Joseph, senior analyst at Jupiter Communications in New York. "You also have to consider a 20 percent premium is very, very high. It raises all sorts of questions as to what Zap is thinking when it makes those kinds of offers," she said. "Zap claims the move is in direct line with their Internet plans, but apart from announcing the (Webzine purchases) and developed domains, what are the plans? It's not clear what they are."