November 30, 2000 9:45 AM PST

Compaq, Disney draw up $100 million deal

Compaq Computer and the Walt Disney Internet Group announced a three-year, $100 million deal Thursday.

Under the agreement, the entertainment company will buy Compaq hardware. In turn, the PC giant will buy ads on Disney-owned Web sites.

As part of the deal, Compaq is dubbed the "preferred technology provider" to the Walt Disney Internet Group, which runs all of Disney's Web sites including its primary properties, Disney.com, ESPN.com and ABCNews.com. Compaq will provide the servers that power the Web sites, as well as desktop computers and laptops.

Executives from both companies declined to say which company will get more of the revenue from the deal.

Steve Bornstein, Walt Disney Internet Group's chairman, said on a conference call that Disney will buy tens of millions of dollars worth of Compaq hardware, while Compaq will spend tens of millions of dollars on online advertising.

"Suffice to say it is a significant impact for both of our businesses," Walt Disney Internet Group president Steve Wadsworth said.

Compaq chief executive Michael Capellas concurred.

"Clearly we're pleased to have this opportunity to provide the infrastructure technology and services for the Walt Disney Internet Group," Capellas said in a statement. "Compaq is uniquely equipped to provide the technology that helps deliver the Disney magic online."

On Compaq's end, its Presario computers will prominently display links to Disney's primary Web sites. These sites, as well as other properties such as Go.com, Family.com and the Mr. Showbiz and Wall of Sound sites, will also benefit from distribution on a range of Compaq PCs and iPaq devices and appliances.

In addition to advertising on Disney-owned sites, Compaq will market the alliance with Disney as part of its "Inspiration Technology" campaign.

The two companies first announced an alliance in February, in conjunction with Compaq's sponsorship of the Mission: Space attraction at Walt Disney World. Compaq also plans to expand its sponsorship at the amusement park.

Disney executives said the deal reinforces the viability of the online advertising market. Wadsworth said on the conference call that online ad revenue on Disney sites this quarter has been healthy.

"It's going well," Wadsworth said. "While there is certainly a (trend) of less of the pure dot-coms spending online, what we are seeing is more and more of the sophisticated, traditional advertisers" spending online.

 

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