Mikeeeeee, it looks like it's all over! Where are you? Once again, SRCM is not anywhere to found: "
AOL, Hughes Set Expanded Pact
To Deliver Internet Over Satellite
An INTERACTIVE JOURNAL News Roundup
America Online Inc. gave clearer direction to its broadband Internet plans
Monday, agreeing to invest $1.5 billion in Hughes Electronics Corp. to
expand the firms' efforts to online services and interactive television via
satellite.
Separately, Hughes plans to use Intel Corp. microprocessors in a new
generation of TV-set-top receivers, one of Intel's biggest endorsements to
date outside the personal-computer business (see article).
AOL has turned to Hughes, Germantown,
Md., as a second part of its broadband
Internet strategy, having already announced a
pact in May to set up an interactive-TV
venture called AOL-TV. When that deal was
announced, AOL indicated it was just the first
step of a broader alliance with Hughes. AOL
has also set deals to offer high-speed services
to users of digital-subscriber-line, or DSL,
services, as it fight to avoid being eclipsed by
high-speed cable Internet providers like Road
Runner and Excite At Home.
Services like satellite, cable and DSL offer Internet speeds many time
faster than those of traditional dial-up modems.
The AOL-Hughes alliance is expected to accelerate growth and
revenue-per-subscriber for Hughes's DirecTV television service and
DirecPC satellite-based Internet delivery system, as well as help extend
the reach of the AOL TV interactive television and AOL-Plus high-speed
Internet service.
AOL-Plus will be available through the DirecPC service by early 2000.
For Hughes, the alliance is expected to enhance the development of its
new Spaceway satellite system, scheduled to launch in 2002. Hughes is
investing $1.4 billion in the system, which promises to make satellite
transmission two-way; currently, subscribers to DirecPC can receive
Internet downloads at speeds up to 400 kbps, but must send data to the
satellite through a traditional phone-line connection. This puts it at a distinct
disadvantage to both phone and cable companies.
AOL, Dulles, Va., said it will make a $1.5 billion investment in a General
Motors Co. equity security, which carries a 6 1/4% coupon rate that is
automatically convertible into GM Class H common shares in three years.
(Class H stock tracks the performance of Hughes, which is a unit of the
auto maker.) GM will immediately invest the $1.5 billion in a security of
Hughes under similar terms so it can be used to implement the strategic
alliance between AOL and Hughes.
AOL said its investment won't dilute its earnings.
Hughes and AOL will market one another's products, with AOL
marketing the DirecTV/AOL package to its 16 million U.S. customers and
Hughes marketing AOL TV to more than seven million DirecTV
subscribers.
AOL's so-called AOL TV satellite receiver is expected to be available
next year and will feature interactivity such as personalized stock quotes,
local weather information and custom sports data." |
