Jacking in from the "Digital Alchemy" Port:

Washington -- MCI and Rupert Murdoch's News Corp. think they've found the formula for "digital alchemy." They better be right.

Tomorrow, Wednesday, the companies will announce they are merging their respective "digital lead" subsidiaries -- internetMCI and Delphi -- into a single joint venture. The upshot: Turn these two stunningly mediocre online services into a kick ass, on-the-edge cohesive "Net-Centric" experience that not merely rivals its out front competitors -- America Online, CompuServe and Prodigy -- but becomes a front runner. "We want to *dominate* the online world," says an MCI source close to the deal.

Earlier this year MCI sunk $2 billion into Murdoch's pocket for a piece of his global media empire. The merging of internetMCI and Delphi comes about as part of that deal. A name change is in the works for Delphi, but nobody coughed up that hairball for Dispatch; you'll have to wait for the press conference.

The merger of the two systems -- hell, let's call this what it really is, a merger of two corporate *cultures* -- has been a closely guarded secret. Although the companies will announce their battle plan, outlining how they hope to structure the joint venture, insiders from both companies admit there isn't much substance beneath the paper. "But there will be," says a Delphi source. "We're committed to making this new venture the most attractive in the business, from both the user and content provider perspective," said an MCI source.

During a recent MCI news conference, in which MCI had to explain why the company was cutting thousands of jobs and restructuring, Chairman Bert Roberts said of his pending business venture with Murdoch: We will be "proactive in terms of how the industry is shaped." And then he shut up.

The deal will apparently fold in Delphi's main computer conferencing system and Kesmai, the interactive game portion with parts of NetworkMCI Business, internetMCI and even MCI Mail. The result: the joint venture ends up looking a lot like your Aunt Martha's macaroni salad -- the kind you always have to eat at family picnics, made from 176 different ingredients, including some you can't even spell, let alone remember ever showing up on a dinner plate.

To pull this off will be quite a feat. The challenge will fall to MCI's Scott Kurnit. You might remember Kurnit as the guy that parachuted out of Prodigy's top slot to head up MCI's internetMCI service. Talk about the bad penny syndrome. Kurnit now finds himself back in the spotlight, having to shepherd yet another commercial online service through increasingly rough and tumble waters. But instead of trying to snort life into a wheezing Prodigy, Kurnit now has to find a way to pull off what will damn near be a miracle: Drag the beleaguered also-ran Delphi system off life support.

Kurnit will replace Delphi CEO Alan Baratz, who has been in the job less than a year. Baratz moves to head up a new technology group inside News Corp.

Anthea Disney, recently hired by MCI to help Kurnit beef up the content of the internetMCI offerings, becomes Editor-in-Chief. Her well-padded resume includes such standout stints as TV Guide and the TV tabloid show, A Current Affair.

Kurnit had no inkling that such a task was in the offing when he signed up with MCI. Now it's his baby, for good or ill. Those that know Kurnit say he'll make the best of it, even though his heart was more set on developing the preeminent WEB service. Now he'll just wrap that vision into Delphi, trying to meld the two services that will form the crux of a Way New Competitor. He'll have plenty of help: The MCI brand name and the MCI Telephone Storm Troopers.

During a ten minute "this is it gang, it's been swell being your boss, but..." telephone conference Baratz held with Delphi employees, he sketched out how the formidable MCI "Friends and Family" database will be used by MCI's "direct marketing" arm to help juice the new venture's subscriber levels.

You can hear those calls now: "Hi, I'm from MCI and would you like to switch your online service? We got your name from..." Laugh (or cry) if you want. The fact is, that campaign has been deadly effective for MCI. Just ask AT&T, which, until just recently, found itself getting its long distance ass kicked at every turn by "Friends & Family."

Delphi has quietly been hiring talent; the employee ranks have swelled by almost eightfold. Non-producers are summarily shoved out the door, even the suits. Two executive vice presidents, whose hiring made the grey lady pages of the Wall St. Journal, were ousted within four months.

Baratz, for his part, was intent on getting Delphi employees to focus on "the job." During the early months on the job, Baratz was fond of pulling a dozen or so employees into an intimate meeting. He'd stare around the room for a minute and ask a single question: "What business are we in?" Then he'd shut up and listen. But he didn't have the horsepower... or maybe he just didn't have $2 billion in pocket change from MCI.

What does MCI bring to the party? Well, they have a solid Internet infrastructure, built and designed by the best geek-digerati money can buy. The content side of internetMCI has suffered; more like stumbled. A process of trial and error. But they haven't quit or been handcuffed by the suits up top. And in fact, they are proceeding with content production at breakneck speed.

internetMCI's content side will "re-launch" next month, according to Brian Rupert, product manager, internet applications for MCI Internet Services. The emphasis is now on the "context," providing a "much richer and more navigable" service, he says, wondering if "navigable" is "really a word."

Rupert is knee deep in the content development; he says his group hasn't had much contact with the Delphi folks. "It's way too early to be going over [to Delphi] and saying, 'Hey what have you got? Here's what we have,'" he explains in a tired drawl from his Tyson's Corner office in Virginia. You see, Rupert has just returned from the Ultimate Rock/Blues Road Trip: A long weekend in Chicago, following up some of his favorite bands. Now *this* is my idea of a content developer!

Rupert is overseeing internetMCI's baseball page and will soon hancho the entire sports section. But other improvements are in the works. The entire news section will be spun off into something called "Digital Daily." Rupert says that with the added advantage of using Delphi as a front end -- and work is being done to beef up Delphi's user interface, and in fact, is quietly now in beta test among some Delphi users -- access to internetMCI won't be so awkward, a problem in the early going with the system. "We'll be putting [access] disks in every magazine on the news stand," he says.

Does all this make sense? One former MCI employee asks: "What's the magic multiplier here that is supposed to make the public stand up and cheer?" Good question. You could ask the same thing of Bill Gates and the Micro-No-Show Network.

Here's how it could shake out. Delphi has the experience in billing, customer service, etc, needed to run an online venture. MCI has squat, except for Kurnit and his merry internetMCI band. But MCI has the market muscle. Big plus. And then there's The Murdoch Factor.

Love or hate this guy Murdoch, you have to deal with him. He is aggressive and pushy and bloody rich. And he's willing to pony up the dollars to get the content he needs. Look at the Fox TV network and think "Online Blueprint." He turned Fox into a viable major network so fast that nobody laughs anymore. Murdoch has also encouraged hip, on the edge programming on Fox. Yes, some of it is culturally void... who the hell cares?? Don't watch; a lot do.

If Kurnit has the stones to follow Murdoch's example and go out and grab similar "experimental" content, his system may just be the Cybermagnet he could only dream about. All he has to do is sniff it out and write out a check.

Quick Memo:
To: Louis Rosetto, Wired Magazine
Subject: Doing Lunch

Louis-- Do what you have to do get a lunch with Murdoch. And soon! Pitch him HotWired. Sell it to him for the new online venture, which will be built around the availability, speed and flexibility of the WEB. This makes it a radical departure from the Tired Triplets, AOL, CIS and Prodigy. I mean, fercrissake, Murdoch was going to give Newt Gingrich $4.5 million for an unwritten book. HotWired has to be worth several times that.

And to Kurnit: Go "in search of" on the Net. There's plenty of content out there waiting to be "cultivated." Much of it is risky; you wouldn't find it on AOL, not in your dreams. But it's popular and it's getting more popular. If you can harness it, you stand a chance.

This MCI-News Corp. venture can't stand to idle into atrophy as Delphi has done for so many years. There's too much at stake now. The venture will, for good or ill, live it large or implode.

Either way, it'll be a hell of ride. It's not even out of the box yet and I like its potential better than Billie's Big Online Adventure. Just don't come to Dispatch looking for a quick sale; we can't be bought... Yet.

Meeks out...


Copyright © 1995 CyberWire Dispatch / Brock N. Meeks <brock@well.com>