July 1, 1996

INTERNET SEARCH ENGINE COMPANIES MERGING

MOUNTAIN VIEW, Calif. (AP) -- In the first consolidation of major Internet search engine companies, Excite Inc. will buy McKinley Group Inc. for $18 million.

The deal is the most visible sign to date that there isn't enough of a market to sustain the nearly dozen large-scale electronic directories of information on the Internet's World Wide Web.

The companies develop databases that note what information is available on the Web. Computer users search the databases through Web pages maintained by the companies, which typically derive revenue by selling advertising space on those Web pages.

Excite's Web site and McKinley's Magellan On-Line Guide combined receive about 4 million requests for information a day.

Rivals Lycos and Infoseek also get about 4 million requests each. Yahoo, a service that sorts Web sites into a catalog-like structure, gets 6 million visits a day.

Earlier this month, Yahoo arranged to connect its users to the Alta Vista search engine of Digital Equipment Corp. as a secondary source of information. While Yahoo acts as a catalog where producers of information on the Web must register to be listed, Alta Vista is an automated program that takes a much broader view of the Web but does not sort out information.

"This deal lets us take the service to the No. 2 position in terms of market share," said Richard Redding, Excite's acting chief financial officer. "Our goal is to be the No. 1 company."

Excite will buy privately-held McKinley, based in Sausalito, Calif., by issuing 1.2 million shares of stock.

The deal was announced after stock markets closed on Thursday. Excite's stock was down 25 cents to $8 in midday trading on the Nasdaq Stock Market Friday.

McKinley was started by Christine and Isabel Maxwell, daughters of the late British publisher Robert Maxwell. Magellan was the first site to publish reviews and ratings of Web sites. But Magellan was late in selling ads; other companies began last fall while it started in February.

Redding said Excite has not yet decided whether the Excite and Magellan Web sites will remain separate.