Building a Better Mousehole

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The first thing Disney wants you to see when you log on to the Web is those famous mouse ears, and it's spending more than $70 million to make it so. The company today gave up the cash and its stake in Starwave to buy 43 percent of search engine Infoseek as part of its push to capture a dominant market share on the Web. "With this acquisition and trade, Disney is an instant player," says TIME San Francisco bureau chief David Jackson. "You need a popular web site to extend your brand, and Infoseek will give them that."

Disney's entry into portal combat is a smart move, says TIME technology writer Michael Krantz -- and a relative bargain. "Disney's really strong and smart about what it wants to do on the Web, and Infoseek's one of the few out there that's affordable," says Krantz. "They're not going to buy Yahoo [which is valued at more than $5 billion], and Excite just turned down a $1.5 billion takeover offer."

Wall Street reaction was mixed. Disney finished down $2 5/16, while Infoseek gave up most of its early gains to rise just $ 5/8. The deal has some quirks -- why doesn't Disney just buy the entire company? -- but it does give Disney a leg up on competitors such as Fox, NBC and Time Warner (which saw its stock dip Tuesday on rumors that it also was a potential Infoseek suitor). "It's a giant eyeball sale, and Disney now has millions more eyeballs every day," says Jackson. Making it a very small Web, after all.