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CompuServe does phone deal

Tel-Save Holdings enters a multiyear deal to market its long distance phone service to CompuServe members.

Tel-Save Holdings (TALK) today announced that it inked a multiyear deal to market its service to CompuServe (CSRV) customers.

The deal clearly signals that the online service portion of CompuServe, which officially became part of America Online (AOL) this week, will be adapting the same marketing strategies as its parent.

AOL cut a lucrative deal with Tel-Save in February 1997 and has made similar deals with other large companies willing to pay AOL significant sums for the privilege of marketing to AOL's 11 million customers.

Tel-Save paid AOL $100 million for the right to market its long distance phone service on the No. 1 online service.

The deal has reportedly worked well for both parties.

Neither Tel-Save nor AOL disclosed the terms of the CompuServe deal, but AOL spokeswoman Wendy Goldberg said that both CompuServe and AOL executives were involved in the negotiations.

AOL has repeatedly stated that it will retain CompuServe as a separate online service. But that doesn't mean AOL will not exert its influence.

The deal, said Brian Oakes, an analyst with Lehman Brothers, "means that [AOL] will provide its marketing clout to CompuServe. I think this is part of the CompuServe strategy. CompuServe clearly didn't execute on the marketing and advertising revenue streams. That's the first thing AOL is going to fix."

The agreement announced today not only allows Tel-Save to market its long distance service, but it also gives Tel-Save "certain exclusive rights with regard to offering local and wireless services when available," according to Tel-Save.

"With our continued success over America Online, the CompuServe base is a natural extension for Tel-Save," Tel-Save chairman and chief executive Dan Borislow said in a statement.

Tel-Save offers AOL members a special 9 cents-per-minute rate and will extend the offer to CompuServe members.