The acquisition of the publishing company's 20 percent stake will give AOL complete ownership of Digital City. In return, the Tribune will provide local news for 14 Digital City markets and promote the service through television and print. Digital City will also feature Tribune's BlackVoices.com, a site for African-Americans, throughout its network.
Digital City is a network of local Web sites that feature entertainment and leisure information, such as restaurant reviews and event listings. The idea behind these guides is to reap revenue from local business advertising and classifieds, the traditional revenue stream for newspapers.
The division faces competition from Ticketmaster Online-CitySearch, which is partially owned by Barry Diller's USA Networks. Last July, Ticketmaster Online-CitySearch acquired Microsoft's Sidewalk local guides for $280 million, which boosted the company's reach from 60 cities to 77.
Newspaper chains have also taken steps to curb a potential cash drain. Last September, Knight Ridder, the nation's second-largest newspaper chain, launched its Real Cities network, which combine news from the chain's regional newspapers with popular Web offerings, such as free email, a search engine, and a section for online retail.