May 27, 1999 10:00 AM PDT

Fox launches media firm for health market

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Health an online moneymaker

October 27, 1998
The battle to provide health care information and services over the Internet just hit a feverish pitch.

Fox Entertainment, a subsidiary of media giant News Corporation, today announced it will launch the Health Network, a new media company that will provide health information and products for consumers, physicians, and hospitals through an integrated Internet and cable platform. The service is set to launch in mid-July.

The new venture is squarely aimed at taking on Healtheon and WebMD, who last week agreed to merge to form Healtheon WebMD. Healtheon focuses on facilitating health care transactions over the Internet and via other proprietary services while WebMD offers medical information and services to physicians and consumers.

Although the merger brought great media attention to both companies, analysts stress that the Net medical information and services field is still wide open, and perhaps even giving an advantage to Fox's Health Network because of its cable assets.

"Fox and News Corporation are extremely committed to driving traffic through all their cable and broadcast venues," said Health Network president J. Tod Fetherling. "We are the only healthcare site with any significant media partner."

Fox Entertainment president Peter Chernin said in a statement that the company plans to put its extensive television and cable muscle behind the new venture to accelerate subscriber growth and to expand opportunities for e-commerce applications. Health Network will start off with 17 million cable and satellite subscribers in all 50 states.

Fetherling added that the Health Network is looking at options to take the company public.

"There are benefits in being a public company as well as benefits as a private company," said Fetherling. "We are in the process of determining the structure we want going forward."

The Health Network was recently formed through the merger of America's Health Network, a health and medical cable network, AHN.COM, a consumer-health Web site, and FOX's Fit TV, a fitness and healthy lifestyle cable network.

The site will also provide online physician-education courses in partnership with HealthStream, and an Internet-based information service for hospitals in partnership with HCIA.

The new network will feature programming, including daily health news and regularly scheduled programs designed to attract large "communities" of health-conscious consumers. Viewers will be able to find more information, multimedia programming, and e-commerce opportunities on the Health Network's Internet site. The site also plans to expand its broadband content.

"There already is an evolving broadband strategy and we will continue to work on it," said Fetherling. "We think broadband is actually catching on faster than most people anticipated."

The Internet health care field is already crowded with several players pulling in more traffic than Healtheon WebMD, according to analysts.

The online consumer healthcare market is expected to grow to $1.7 billion by 2003, according to research released this week by Jupiter Communications. Jupiter estimates that the total online/offline market for consumer health goods is expected to be $205.2 billion by 2003.

Although online purchases represent but a small segment of the market, Restrepo notes that the absolute dollar amount is much higher than that spent online on other consumer goods such as books.

"While [Healtheon and WebMD] have made a lot of news and they have rich stock valuation, by no means are they the leader in the consumer health content space," said David Restrepo, a health analyst with Jupiter Communications. "There's a tremendous competition."

Just last week at the Liberty Media shareholders' meeting, the Discovery Channel announced it plan to launch a health channel with an Internet component.

Other competitors include IntelliHealth, OnHealth, Mediconsult, and Adam.com, among several others.

While the Health Network is backed by the deep pockets of Fox and News Corporation, Healtheon WebMD has its highly flying stock valuation to lend a helping hand.

"I expect [Healtheon WebMD] to acquire some of their rivals that are ahead in terms of traffic," said Restrepo. "I also wouldn't be surprised to see them acquire companies to build up the e-commerce side of the business."

Restrepo noted that currently there is a clear line between companies that provide content and those that have e-commerce applications. But he added that the line will begin to fade soon.

The Health Network already has plans to sell durable medical products and fitness equipment, and may expand to the online prescription field that is crowded already with Drugstore.com, Soma.com, and PlanetRX. Brick and mortar pharmacist CVS also said recently it plans to go online.

"We will have partnerships with one of the leading online pharmacies which we will announce soon," said Fetherling, declining to specify which one.

 

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