|BUSINESSWEEK ONLINE : APRIL 3, 2000 ISSUE|
|BUSINESS WEEK E.BIZ -- PERSONALITIES
George Bell: The Year of Living Painfully
Excite@Home has lost value and alienated its partners. CEO George Bell is facing the greatest adventure of his life
In 1986, George Bell was shooting a documentary film about the descendants of the Dayak headhunters of Borneo. His team had been dropped into the jungle by plane, and, after weeks of filming, they were to be picked up in the same spot. But the day before the rendezvous, the group became hopelessly lost. They couldn't find the right trail, and their jeep was getting battered as they plowed through dense trees and shrubs. What did Bell do? When he heard the plane circling overhead, he set the jeep on fire so it would burn a hole in the jungle's canopy. The pilot found the party, and they got out unscathed. ''What's the worst that could happen? We'd pay the government $5,000 for a crummy jeep. At least we got out of there,'' says Bell.
Good thing Bell knows that drastic times call for drastic actions. The 43-year-old former documentary film producer took over as chief executive of Excite@Home Corp. (ATHM) two months ago, just as the company was settling into the worst funk of its short and unhappy life. Now, he has to use all the skills he learned as an adventurer, junior media mogul, and boss of one of the premier Web portals to shake up this once-promising company. His goal: that Excite@Home fulfill what he believes is its destiny as one of the giants of Internet media.
When Bell's Excite Inc. merged with @Home Corp. last year, it seemed to be on the verge of a breakthrough. Excite's Web portal was gunning for market leader Yahoo! Inc., and @Home had the exclusive right to sell broadband Internet access over the cable networks that pass by 72 million homes. But these days, the company is reeling. Its cable partners plan to yank its exclusive right to offer Net access via their networks as early as June 2002. The merger of America Online Inc. (AOL) and Time Warner Inc. will create a bruising competitor with broadband pipes, content like Time magazine, and 20 times as many subscribers as Excite@Home. Some critics argue that the combination of @Home's Net access with a portal like Excite never made sense in the first place. ''That's a very compelling idea that's never been proven to work,'' says Drew Lanham, senior director of business development at Yahoo.
Dayak headhunters would look like polite dinner guests next to Bell's investors these days. Excite@Home's stock has tumbled from a high of $99 last year to $30. That has knocked Excite@Home's market cap down to $10.8 billion, 70% less than its April peak. ''I finally gave up,'' says Peter Cole, who runs his own investment-research firm in Oakland, Calif., and has sold all his stock in Excite@Home in the past few months. ''I didn't understand what was going on.'' Even Bell acknowledges he's in a jam. A former executive at Times Mirror Magazines (TMC), he proposed his own headline for this story: ''The man with the hardest job on the Net.''
Not that Bell is entertaining the thought of failure. A tough-as-nails competitor who once played professional squash, he's laying out an aggressive game plan for building Excite@Home back into one of the hottest players on the Net. For starters, he plans to squeeze every advantage out of his position as the only available provider of cable Net access to 59 million homes in the U.S. and 13 million homes abroad. ''It's important to remember that there's not another company anyplace that has an exclusive distribution agreement with anybody,'' he says.
And he's willing to risk the ire of his cable partners to collect customers. Bell is starting to market broadband Net access over phone lines, using digital subscriber lines (DSL). He can do that only outside the territories of his cable allies right now. But after exclusivity expires, he may take the dicey step of teaming up with phone companies to go head-to-head with his biggest shareholders, AT&T (T), Cox Communications (DE), and Comcast Communications (CMCSK). ''Anybody will be able to do anything to anybody,'' he says. ''At the end of the day, we're indifferent about which technology becomes superior.''
He's not just relying on technology. The real value that Bell is bringing to Excite@Home is a deep understanding of traditional media that's rare among New Media companies. Besides a filmmaker, Bell's been a magazine publisher, writer, and a producer at ABC television. With that experience, he's determined to bring the most attractive features of film, TV, and print to the Net. For example, he has cut deals so that Excite visitors can listen to audio clips from Bloomberg about the day's stock market or watch video of mountain-climbing expeditions. On Mar. 28, the company will take the wraps off a new broadband portal that will have a wide array of content customized for subscribers with the fastest connections. If you roll your mouse over a weather icon, for instance, you'll see a Doppler radar view of your region along with a five-day forecast.
Will all this help Bell restore Excite@Home's luster? He has a lot to prove to investors like Cole. The company hit 1.1 million subscribers at the end of December, two years after originally promised, and its online sites have lost ground recently, in part because of the merger distractions. Excite and its other properties such as greeting-cards supplier Bluemountain.com have slipped to fifth place in popularity with 27.7 million unique visitors in January, according to Media Metrix--behind AOL, Yahoo (YHOO), Microsoft (MSFT), and Lycos (LCOS).
But as demand for speedy Net connections booms, Bell is in an enviable position: He's the only provider of Internet access over cable networks in about 60% of the country for at least two more years. The most viable rivals are the Baby Bells, but their DSL service tends to be more expensive than Excite@Home's $40-a-month offering, and most already are falling behind their own goals in rolling out service. Bell is laying out specific targets for growth that, if he hits them, should reassure Wall Street. He expects to have 2.5 million to 2.8 million subscribers by the end of this year and between 8 million and 10 million by the close of 2002. He has some analysts convinced. ''I buy those numbers,'' says Warburg Dillon Read analyst Michael Wallace, who is recommending that investors buy the stock.
Bell will need a bit of luck on his side too. There's been a raging regulatory debate over whether AT&T and other cable companies can grant exclusive rights to provide Net access to favored companies like Excite@Home. Certain cities, such as Portland (Ore.), have insisted that cable players let competitors use the same cable network to offer Internet access. A U. S. Appellate Court is expected to issue a ruling in the debate within the next two weeks. If it goes in favor of Portland, Excite@Home could lose its exclusivity well before 2002. While some experts says there's reason for him to be worried, Bell says there's very little chance he'll lose the court case.
Another big concern for investors is Excite@Home's relationship with its cable partners. The key reason Tom Jermoluk, the company's chairman, ceded the CEO role to Bell is that Jermoluk has been spending almost all his time negotiating with AT&T, Cox, and Comcast. ''No question, [it's been] the single most difficult and painful year of my life,'' says Jermoluk. Even now, AT&T and Excite@Home disagree over when the smaller company's exclusive use of the AT&T network expires. James W. Cicconi, AT&T's general counsel, insists that all exclusivity ends in June, 2002, while Bell says it terminates later in some AT&T markets.
Still, Bell, with Jermoluk's help, has begun mending fences with his cable partners. BUSINESS WEEK has learned that the three major cable owners plan to extend their contract to let Excite@Home sell Net access over their networks after the current contracts expire--although the new contracts won't be exclusive. ''I expect that we'll have some sort of MFN, or most-favored-nation agreement, with them,'' says Bell.
Leave it to Bell to strike a savvy political compromise. George deBenneville Bell Jr. grew up in a distinguished Philadelphia family with a long line of prominent politicians, lawyers, and financiers. His grandfather was governor of Pennsylvania, albeit briefly, and served as chief justice of the state Supreme Court for 11 years. His great-grandfather was district attorney in Philadelphia from 1903 to 1907 and Pennsylvania's attorney general from 1911 to 1915. George's father, George Sr., became co-chairman of investment bank Janney Montgomery Scott Inc. and became close friends with former President George Bush while the two of them were at Yale University.
Growing up among CEOs, chief justices, and presidents, George Jr. clearly faced great expectations. Even going to Harvard University wasn't considered that impressive in his family. ''The worst thing I did was go to Harvard,'' he says. Not that it wasn't a good school, it's just that his father went to Yale and his grandfather went to the University of Pennsylvania. Bell, however, didn't feel any pressure to follow his father into finance. That's because his older sister, Sophie Ayers, excelled in the field. She joined First Boston, now Credit Suisse First Boston, in 1977, when there were few women on Wall Street. She is now a managing partner at Russell Reynolds, recruiting top finance executives. ''In many ways, she was the first-born son,'' says Bell. ''She cleared the way so I could go my own way.''
Early on, Bell explored career options far from finance and politics. At Harvard, he studied English, and wanted to be a writer. He had several fiction and nonfiction pieces published, including a fictionalized story about Robert Louis Stevenson's life in Western Samoa. ''It was very well done,'' says David McKean, Bell's roommate in college and now chief-of-staff for Senator John F. Kerrey (D.-Mass.). Bell still has a literary bent: He regularly reads Homer's Odyssey and poetry by Robert Lowell.
Instead of banging away at a typewriter in solitude, Bell headed into television, where he could combine writing with adventure. He first worked for ABC Inc. as a writer and producer and later jumped into making independent documentary films, primarily about vanishing peoples, mountain climbing, and the environment. He won four Emmy Awards while exploring the world. He fished with former President Jimmy Carter, lived with pygmies in Africa's Ituri rain forest, and survived a plane crash in Africa. Those kinds of experiences have made him more effective at dealing with his high-maintenance cable partners. ''I think what makes George so unique is that he's traveled so extensively,'' says Peter Winter, president of Cox Interactive Media, which is part of Cox Communications, one of Excite@Home's major shareholders. ''He knows that he has to listen to other people's points of view. That's a big part of who George is.''
Making movies also turned out to be pretty good training for the Net. In his travels, Bell learned how to make decisions in unpredictable situations. ''Those years were the most relevant years in helping me learn how to manage on the Internet,'' he says. ''There's always something you didn't plan for.'' Consider this: On one trip to Venezuela to shoot a documentary about vanishing peoples, Bell and his team ran into a problem: The people had vanished. Bell already had paid for cameramen, equipment, permits, and airline tickets. ''National Geographic has paid us $300,000 to do a show, and we were going to spend $200,000 even if we came back with nothing,'' he says. One of Bell's crew knew that they could probably find a newly evolved species of plant in the crater of a nearby volcano. Bell's plans changed on a dime. ''O.K., it's a plant show,'' he said.
Bell has developed a reputation for being cool under pressure. His wedding reception in 1991 took place at the tony Maidstone Arms Inn in East Hampton, N.Y. But shortly after the guests arrived, a bomb scare sent everyone scurrying onto the golf course. A cart filled with cocktails was pulled out onto the greens, and George and his bride, Carrie, danced on a fairway. ''If it had happened to anybody else, it would have destroyed the wedding,'' says Jonathan Alter, a Newsweek reporter who went to Harvard with Bell. ''George handled it with complete humor and charm.''
Perhaps because he was successful early on in his career, Bell has developed a willingness--even a desire--to try new things regularly. ''I have a high degree of trust in myself,'' he says. ''I'm willing to react to things instinctually. It hasn't let me down so far.'' Indeed, after making documentaries for five years, he signed on at Times Mirror Magazines and rose quickly to become senior vice-president. He was valued there because he saw opportunities where few others did. For example, he realized that Times Mirror could reap new revenues by offering advertising in its Field & Stream magazine along with advertising on new cable shows about fishing. ''The industry was in a funk, and he found an innovative way to grow,'' says Francis Pandolfi, the former CEO of Times Mirror Magazines.
Bell also showed little hesitance in leaving what could have been a comfortable career in the New York magazine world for the rough-and-tumble frontier of Silicon Valley. When he was interviewed for the job as CEO of Excite, he knew he wanted it immediately. ''These guys weren't going to take the 5:42 train to Jersey,'' he says. ''They were just going to stay in their dingy cubicles until they were declared winners. That was very refreshing.'' And, just as he did at Times Mirror, he's been able to find new growth opportunities at Excite. To boost Web traffic on his Web site, he cut cross-promotional partnerships with AOL and Netscape Communications, and made strategic acquisitions of search engine WebCrawler, online marketer MatchLogic, and Bluemountain.com.
Bell will need all his experience to guide Excite@Home out of its troubles. His plan to float a separate tracking stock for the Excite portal seems to have placated cable partners who didn't want to be in the content business. But if Excite@Home's stock price sinks much more, all bets are off. To reassure investors, Bell will have to keep Excite among the most popular portals through promotions, partnerships, and strategic acquisitions--and he'll have to hit his aggressive targets for boosting @Home subscribers. ''What Wall Street doesn't like is uncertainty,'' he says. How important is boosting the company's stock price? In his new role as CEO, he has taken to talking to financial analysts so regularly that there's a list of the most important Wall Street players tacked to the wall right above his desk in Redwood City, Calif.
In Bell's cubicle, there's also a large framed photo of Mount Everest with the rosy fingers of the sun just touching the snow-capped peaks. It's an appropriate metaphor for Bell's life and his job at Excite@Home. He knows he may very well have the hardest job on the Web. But that just gives him a tall peak to conquer.
For more stories about George Bell's adventures and a Q&A with the CEO, go to ebiz.businessweek.com.
By PETER ELSTROM
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George Bell: The Year of Living Painfully
RESUME: George deBenneville Bell Jr.
TABLE: Bell's Broadband Battle Plan
TABLE: Excite@home vs. the Competition
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