SAN FRANCISCO -- Like most Internet chieftains vying to be king of the online world, Tom Jermoluk is a busy man. In the past few months, Jermoluk -- known to his friends and colleagues as TJ -- has busted some big moves, pole-vaulting @Home (ATHM) - Get Report into the top tier of Internet powerhouses. His biggest coup was crafting the Internet's second-largest merger to date, agreeing to exchange $7.5 billion in @Home stock to acquire the Web portal Excite (XCIT) .
But Jermoluk -- @Home's president, CEO and chairman -- has plenty of other pots cooking. Based in Redwood City, Calif., @Home already has secured the exclusive rights through 2002 to deliver high-speed Internet access to nearly 60 million North Americans over the networks of 19 cable operators. And he's busy lining up the remaining stateside cable operators and a host of new ones overseas. On Thursday, @Home announced an agreement with
, its 20th exclusive cable partner, which increased @Home's distribution by another 1 million homes in Illinois, Maryland and Virginia.
And then there is Jermoluk's obsession with interactive TV. The only stain on Jermoluk's successful run as
president and chief operating officer was the set-top boxes he built for
in Orlando, Fla. The indifference among Orlando customers made the project a wash at best.
But that hasn't stopped Jermoluk from banking a large part of @Home's future on a new generation of set-top boxes. Of course the Excite merger, international expansion, and possible mergers with Time Warner's RoadRunner and
WorldNet don't hurt. The pool parties, however, are just a perk.
: Now that the
has been announced, will you be merging with RoadRunner?
: I think you've certainly got to handicap that way. The fact that one of our strongest, biggest partners now has a foot in both camps makes it that much easier to have the right conversations.
: One executive said that he "can't imagine it not happening." What's stopping it?
: Just time. I've always thought it was in the best interests of consumers to have RoadRunner and @Home together because the consumer would like to have one seamless service. It's such a compelling story from a technology standpoint that it's always been inevitable in my mind that these things should go together. But there are a lot of complexities. For the three years that I've been here, we've been constantly talking. When people decide that they want to get it done, it could be done.
: @Home is in talks with cable companies in Europe and Japan. Have you made any progress there or in any other regions on the global front?
: We're talking with everybody. We have consulting contracts with 10 different smaller countries. The reason we targeted the U.K. and Japan is that they're populous centers and they have major two-way plant because it's all been done recently. So it doesn't have to be upgraded. Japan's got 6 million homes, and the U.K. has 9 million homes. We're talking in Korea, Australia, Spain, Germany and Austria. We also have bids in with a number of them. We also started one company in the Netherlands. We've already hired 50 full-time employees, and they just went alpha. So the real service is running now. There's more two-way plant internationally than in the U.S. So it's got to be a great opportunity.
: Most analysts have you at 1.1 million subscribers by year-end. Are you on target?
: We feel we're in good shape. We feel comfortable with the analysts' expectations for the quarter and the year.
: And the status of your acquisition of Excite?
: We are awaiting our comments back from the
with which we anticipate no problems. It would be our estimation that we would get the final go-ahead sometime in mid-April, with another 30 days for a shareholder vote. So it should close in the middle of May with any luck. We've already delivered our shareholder vote. And Excite has delivered 25% of their vote. We're both extremely confident that this merger is going to occur.
: What will the new integrated company look like?
: It's pretty simple actually. You put @Media
a unit of @Home and Excite together, and the rest of the company is pretty unaffected. We haven't had to spend a lot of time on organization. That's one of the nice aspects of this merger.
: Do you plan to lay off people?
: We're both hiring like crazy. I can guarantee you that we're both looking for people as fast as we can find them. The transaction is accretive from the very first quarter, so all we're looking at is to accelerate revenue growth even more, which takes more people and creative thinking.
: What percentage of Excite's 20 million registered users is cable-modem-enabled?
: It's reflective of the demographics of the cable plant itself. We have 13 million homes out of 100 million.
: So 13%. What will become of @Home's homegrown portal?
: We're trying to create a seamless experience for the consumer that scales itself to the device and the speed of the device. If you were looking at it in narrowband, it would be all the same personalization, but it would be a narrowband look. But if you were looking at it on a broadband connection, the quality would get better and better. Instead of the text of a story, you would get the audio or video of a story. Then as you moved over to your TV set, again the navigation would be consistent, but of course it's going to change because you're not reading text on a TV screen.
: Now that the AT&T and
merger has been approved, what are the chances that @Home will be merged with AT&T's WorldNet service?
: It makes a lot of sense to think about how to work together with WorldNet. Once you come in and make a person an Excite user, wouldn't you like to start this funnel where you make them an Excite narrowband subscriber? And when you get the plant upgraded in an area, you flip them over into a broadband subscriber. So how do you pull things together? You can merge things. You can make marketing deals with each other. And the fact that AT&T is our largest shareholder certainly makes it easier for us to do it.
We are interested in working out many different things, like telephony. Isn't it logical that we make this a full offering, so when subscribers are sitting in front of their PC or TV, they could look at one bill for their wireless phone, local phone, long-distance phone, cable and Internet?
: Why are you developing a set-top box interactive TV service when all of the test beds have shown that consumers don't care for these services?
: I believe interactive services are a huge opportunity. The pay-per-view people tell me you're four to five times more likely to order a movie if you can click one button on your remote control than if you have to go dial a 1-800 number. There's $288 billion spent on TV advertising each year vs. $4 billion on the Web. Those ads are juts out there, and no one knows what the responses are.
What if I know that your TV is set to Saturday cartoons or NFL football? If it's cartoons, I'm sending an ad for a
doll. If it's football, I'm sending you the
Wrangler ad. That technology all exists today. That's how the Internet works. Now we can apply it to the TV, and these advertisers are going to go ga-ga. There will be lots of trials in 1999 and economic deployment in 2000. The best part of the deployment is that there's another reason these boxes are going out, which is digital cable. So we don't have to charge the consumer incrementally for the box. Then all these services get added on for free.
: When's the next pool party?
: Will Hearst
@Home's vice chairman is supposed to go in. Our IPO party was at the
. We all wanted to jump in his pool, and they were going to fine us $500 a person to anyone who jumps in. So Will says, "When the stock hits 100, I'll bring you all back and I'll lead the way and we'll all go swimming." Within 18 months, we hit 100. So I called him up that day and before I could even get anything out, he said, "I'm on my way to the store and I'm buying a rayon suit to jump in the pool."