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05/04 0903 Powerful coalition of partners teams up to fund … HOLLYWOOD (MAY 4) BUSINESS WIRE – May 4, 1994–Telecommunications giant Bell Atlantic and The Interpublic Group of Companies Inc., parent of several of the largest global advertising agencies, along with Kleiner, Perkins, Caufield and Byers and Technology Partners, to prestigious Silicon Valley venture capital firms, have joined forces with InterActive Partners to fund and build start-up companies in the interactive television and multimedia arena. Interactive Partners is headed by Robert M. Fell, a well-known entertainment communications investor and entrepreneur, and David S. Morse, a technology leader who founded and developed the core technology for Amiga Computer as well as the technology for The 3DO Company's Interactive Multiplayer. Fell and Morse were both founding directors of Crystal Dynamics, a prominent game software company which serves as the prototype for future InterActive Partners companies. This powerful coalition provides key strategic relationships and direct funding for the companies emerging in home shopping, electronic games, education, children's entertainment, gaming, location-based entertainment and other areas. Initial portfolio companies include VideoStream, The New Children's Studio and Silicon Gaming. The equity investment Bell Atlantic and Interpublic will make in InterActive Partners projects represents a new stage in the story of the convergence of Hollywood and Silicon Valley. The strategic partners will be able to provide not only the financing but delivery systems and paid commercial programming to support the consumer channels that will distribute interactive multimedia over a digital network to home TV. InterActive Partners anticipates a large content provider will join the alliance. "The telephone and cable companies have been making investments in Silicon Valley over the last few years. Now, for the first time, a major advertising entity has joined the inner-circle of players in the multimedia arena," Fell said. "Interpublic can bring clients to the table early on and help us determine what kind of new venture would provide the greatest market synergy." Bell Atlantic has been moving quickly to develop full service networks that deliver video programming and information over telephone lines. The regional bell operating company also has been a pioneer in the development of interactive multimedia TV (IMTV), programming and systems under its Stargazer brand. As its Stargazer service comes on line, the company will need content, designed and re-configured for IMTV. "We believe many of the most innovative products and services will emerge from the combined talents of Hollywood and Silicon Valley," said Stu Johnson, chairman, Bell Atlantic Video Services. "Bell Atlantic's sponsorship of InterActive Partners is a vehicle to stimulate the market for interactivity and participate in bringing exciting interactive services to customers." Interpublic, whose holdings include McCann-Erickson Worldwide, Lintas: Worldwide, The Lowe Group and Dailey & Associates, is interested in exploring multiple concepts which will allow the company to develop new forms of advertising as well as interactive television programming. "Our role is to look over the horizon and see what new types of technology can be used by our agencies and their clients to reach their customers more effectively," said Philip H. Geier, chairman and CEO, Interpublic. "It's therefore important to be at the forefront of the convergence of multimedia, interactive television and advertising. Our agencies and their clients will benefit from this early involvement." Kleiner, Perkins, Caufield and Byers has invested in 150 technology companies, including Compaq Computer, Sun Microsystems and Lotus, which have grown into billion-dollar companies. In multimedia, they were early investors and active board members in Electronic Arts, The 3DO Co. and Crystal Dynamics. Technology Partners also made a major commitment to the interactive media area early on by backing Dave Morse at Amiga Computer. More recently, they were the founding investors and active directors in Crystal Dynamics, VideoStream and New Technologies Group, which developed the technology for 3DO. InterActive Partners plans to "incubate" software creators and content providers for the interactive market in newly formed companies. The future interactive market will witness the linking of homes and schools to the fast-growing "superhighway," the full service network that will carry sound, video, text and graphics. "Interactive Partners has an innovative approach to capitalize on the digital waves. The company has pulled together a cast of strong strategic partners with interactive technology experience, communications and networking expertise and immense marketing resources. Their combined talents will help foster innovative technologies and content for the emerging interactive marketplace. "The financial structure allows each member to benefit from the unique strengths and talents of its partners," said interactive entertainment analyst John Taylor, L.H. Alton. The business model adopted by InterActive Partners is similar to that of the film industry. In Hollywood, it is not unusual for a producer to partner with a studio that funds development costs for a movie project in return for the right of first refusal on the film. In this case, Fell and Morse have conceived of and organized new companies which the alliance will fund and help build. "We are looking for talented leaders who have a passion for the convergence of entertainment, computers and communications," Fell explained. "They may have a technical background or come from Hollywood, but in every case they will bring with them an owner's mentality, similar to what Strauss Zelnick, former president Twentieth Century Fox, brought as CEO to Crystal Dynamics." InterActive Partners has two offices, one in Silicon Valley, the other in Los Angeles. Fell and Morse create the fundamental concepts and technology platforms, organize and arrange for the funding of companies, participate in the management and direction of those companies and serve as active members of the board of directors. -0- NOTE: All trademarks and registered trademarks are the property of their respective holders. -0- EDITOR'S NOTE: The following quotes can be attributed to the venture capitalists in the InterActive Partners venture. "Our decade-long working relationship with Bob Fell and Dave Morse makes this a natural collaboration," said Brook Byers, senior partner, Kleiner, Perkins, Caufield and Byers. "They bring their skills and network of contacts from the entertainment, media and computer industries. We bring our 22 years of investment experience." "Back in the '80s when we funded Dave Morse at Amiga we recognized the importance of interactive technologies. Our success with Dave and Bob in launching Crystal Dynamics and VideoStream has led us into the application and content side of this new industry. "We believe InterActive Partners will create some of the most significant companies of the decade," said William Hart, managing general partner, Technology Partners. Interactive Partners' Current Portfolio Companies — VideoStream: a company which has developed a unique consumer interface and delivery system for home shopping via television. — The New Children's Studio: a company dedicated to the development of wholesome children's entertainment. — Silicon Gaming: a venture that will bring the high-quality graphics and animation of video games to the gaming industry. –30–GPN/la CONTACT: The Bohle Co., Los Angeles Cynthia Seymour/Holly Zmetrovich, 310/785-0515, ext. 205/211 or Bell Atlantic Larry Plumb, 703/974-2814 or The Interpublic Group Barry Linsky, 212/399-8068