@Home buys Narrative Communications

@Home Network, a leading provider of Internet services over cable, moved a step closer toward bringing more engaging Internet ads to its users by buying a company that creates high-impact advertising for the Web.

@Home today announced it will acquire Narrative Communications for about $89 million, based on yesterday's @Home's closing price of 66.5 per share.

The company said Narrative's management, employees, and offices will remain largely unchanged, and will continue to serve its existing customer base of advertisers and agencies. According to the deal, Narrative will become the Enliven business unit of @Home.

Under terms of the merger agreement, @Home will acquire all outstanding shares and assume all outstanding options and warrants of Narrative in exchange for 1.34 million to 1.55 million shares of @Home common stock. Additionally, @Home will issue 1.34 million shares, valued at approximately $89 million.

@Home hopes the acquisition will fuel the growth of richer, more stimulating Internet advertisements. According to Forrester Research, results driven by Narrative's technology advantages are expected to grow rich media advertising to 20 percent of all banner ads run in 1999.

Several ad agencies and major advertisers, such as General Motors, Hewlett Packard, IBM, and Sprint, have moved to implement Enliven-based campaigns to increase the effectiveness of their online advertising and direct marketing initiatives.

"The merger of our business with Narrative's is about growth of @Home Network, growth of rich media advertising solutions for our customers, and growth of the Internet advertising market," Charles Moldow, vice president of @Media sales and marketing for @Home Network, said in a statement.

@Home added that they will also have the ability to build more interactive multimedia effects into their online publishing and advertising content.

Advertisers will have the option of conducting large-scale, highly interactive, rich media advertising campaigns across a full complement of Internet distribution channels, including standard dial-up, high speed (T1, ISDN), @Home broadband PC, and TV set-top connections.

"With the resources of @Home behind us, we aim to establish Enliven as the clear standard for advertising across PC, TV set-top, and consumer devices connected to the Internet," Hilmi Ozguc, cofounder and CEO of Narrative, said in a statement.

Narrative had a net loss of approximately $5.7 million on revenue of approximately $250,000 in 1997, and anticipates a comparable net loss in 1998 on revenue approximately three times that of 1997.

The transaction is subject to several conditions, but is expected to close in late December 1998 or early January 1999.