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Mattel spins off Genealogy.com

The toy maker, along with Hearst Interactive Media and A&E Television, create a joint venture to back a new genealogy Web site.

Mattel, Hearst Interactive Media, and A&E Television today announced a joint venture to back a new genealogy Web site.

Mattel is seeking to capitalize on its acquisition of the Learning Company by spinning off a majority stake in Genealogy.com, one of the Learning Company's successful ventures.

Last month, Mattel said the educational-software maker will lose between $50 million and $100 million for the third quarter, creating a dramatic shortfall in Mattel's expected profits. The news sent its shares tumbling 30 percent.

The toy manufacturer bought the Learning Company for $3.6 billion in May. The Learning Company is one of the biggest makers of educational and entertainment programs, including Sesame Street, Where in the World is Carmen Sandiego?, Reader Rabbit, and Myst.

Shares of Mattel climbed 0.88 to 14.44 in premarket trading after the announcement.

Formerly the Broderbund genealogy unit of Mattel, Genealogy.com has received $37 million in initial funding and hopes to expand the genealogy technology business through a more aggressive online presence and by continuing its leadership in the retail software category, the company said.

Genealogy.com consists of three business units: software, online resources, and CD-ROMs.

The new company, based in Fremont, California, will include the existing genealogy Web site as well as Learning Company's Family Tree Maker software and Family Archive CDs.

A&E Television Networks, a unit of the Hearst Corporation, said its investment will provide on-air promotion to educate its viewers on the benefits of using the Internet to explore family heritage.

"The Genealogy.com organization has long been a leader in its category," Nickolas Davatzes, president of A&E Television Networks, said in a statement. "We believe that there is a huge potential market of people with an interest in family history, as evidenced by the popularity of our Biography series on A&E Networks and the success of the History Channel."