America Online will spend up to $8.25
billion to buy out its European partner, the German media
conglomerate Bertelsmann, to take full control of AOL Europe as
well as another joint venture, AOL Australia.
The move announced Friday had been expected since January, when
AOL announced plans to acquire Bertelsmann rival Time Warner Inc.
At that time, Bertelsmann's chief executive Thomas Middelhoff
resigned from AOL's board, citing conflict of interest.
On Friday, Middelhoff said the restructuring of its relationship
with AOL will give the German company "substantial new resources
to focus on our primary goal to fully digitize Bertelsmann's media
properties and build our position as one of the world's leading
Internet content and e-commerce companies."
With 4 million subscribers, including 1.5 million in Germany,
AOL Europe is Europe's second-largest Internet access company,
behind Deutsche Telekom's T-Online.
As part of the deal, AOL agreed to name Bertelsmann a
"preferred partner" for AOL Europe to provide online content from
its music, magazine, book, and other entertainment properties. In
exchange, Bertelsmann will promote AOL in its media outlets in an
effort to add one million new subscribers to AOL Europe.
America Online said the deal will bolster its growth by giving
it twice as many online consumers outside the US than inside by
2004. The number of customers in Europe is expected to quadruple to
125 million, the company said.
Bertelsmann's media holdings include Random House, the music
company BMG Entertainment and Gruner and Jahr, a magazine