Pop.com Backers Expected to Strike Deal With IFilm

The founders of would-be Internet entertainment site Pop.com have found an exit strategy for their once much-balleyhooed but ultimately ill-fated venture.

DreamWorks SKG and Imagine Entertainment plan to fold their 10-month-old Internet operation into IFilm, a leading portal that exhibits short films and provides services to the entertainment industry.

The expected move relieves Pop founders Jeffrey Katzenberg, David Geffen, Steven Spielberg, Brian Grazer and Ron Howard of direct control and is an admission that their enterprise was a nonstarter.

Intended to draw on top Hollywood talent to create original short-form content for the Web, the company failed to find much support among stars and top directors. Plagued by infighting and indecision from the start, the company never found a clear direction.

The principals have been looking to turn management of Pop.com over to another company, laying off most of its 90 employees, The Times reported Aug 1.

As of late Wednesday, the parties did not have a signed merger agreement in hand. However IFilm co-founder and Chief Executive Kevin Wendle confirmed: “We are in advanced discussions and hope to conclude a transaction in the next 48 hours.�

Wendle said that IFilm would manage the combined company, but he would not confirm speculation that the Pop.com moniker would be retired.

“We’re in discussions about many issues and that’s one of them,� said Wendle, a former television executive who helped launch Fox Broadcasting Co. in 1986 and became one of the first entertainment executives to move into the Internet world back in 1993.

Both Wendle and IFilm Chairman Skip Paul were light on other details about the merger, including ownership shares in the merged entity. They also declined to discuss the fate of Pop.com’s existing management team, headed by Chief Executive Kenneth Wong, and its large staff, which has continued to be scaled back in recent weeks because of ongoing problems at the company. IFilm currently employs 150 people.

Wendle did say that partners DreamWorks and Imagine, who were not available for comment, would remain creatively involved in the merged company.

The force behind the merger talks was Microsoft billionaire Paul Allen, whose Vulcan Ventures invested $50 million in Pop.com and who also has a substantial interest in IFilm.

Wendle’s relationship with Allen goes back to CNET, an Internet company Wendle co-founded and Allen invested in to great financial gain. Allen is the second-largest investor in IFilm, behind Wendle, who personally invested several million dollars. Wendle said IFilm has raised $44 million to date.

Other corporate investors include Sony Pictures Entertainment, Kodak, Roy Disney’s Shamrock Holdings and Liberty Digital. Industry investors include International Creative Management Chairman Jeffrey Berg, manager-producer Brad Grey, producers Steve Tisch and Quincy Jones.

Katzenberg and Spielberg are also said to be investors in IFilm, although the company would not confirm that.

“We’re a private company and don’t publicly disclose our private individual investors,� said Paul, who co-founded DreamWorks-backed Sega GameWorks and whose relationship with Spielberg dates back 18 years to his days as a top business executive at MCA/Universal.

As reported by The Times earlier this month, nine months after the Pop.com founders created the online site, they were scrambling to find a merger partner that would allow them to lay off staff, including Wong, and cede management control of their foundering enterprise.

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IFilm was founded in October 1998 and launched its Web site in February 1999. IFilm Network bills itself as the world’s leading film portal and directory, containing links to 10,000 films, including 2,000 in its own library. IFilmpro is an industry-specific Web site featuring proprietary tracking services, news and specialized screenings showcasing the work of undiscovered talent. IFilm also owns and operates such entertainment resources as Film Finders and the Hollywood Creative Directory.