AOL Time Warner announced a blizzard of deals and relationships
Wednesday, coinciding with the newly merged media giant's first earnings
statement and an analyst briefing on the company's future.
As expected, the company moved quickly to capitalize on cross-marketing
opportunities, such as packaging software for AOL Time Warner's America
Online Internet service with Time Inc.'s flagship Time magazine and
extending a promotion on AOL that Chief Executive Gerald Levin said has
netted 800,000 new Time subscribers to date.
The company also expanded on and unveiled new advertising and marketing
deals between companies such as Nortel Networks, Cendant, Compaq Computer
and PurchasePro and the range of AOL Time Warner's print, online publishing
and TV properties.
In addition, the company said it will run all of its media Web sites using
AOL's infrastructure, a move expected to produce substantial savings.
The breadth of the announcements partly reflects the merger's lengthy
gestation period. Regulators took about a year to approve the deal, giving the
companies ample time to lay the groundwork for the marriage.
Many of the deals build on previous initiatives begun last year after the
combination was announced; most fell short of breaking substantial new
On the music front, for example, AOL Time Warner has said it may eventually launch an online subscription service, although Wednesday's announcements
stayed on well-trodden paths.
AOL has worked with Warner Music Group since last year to promote musicians
on its service, most notably for Madonna's recent "Music" CD. On Wednesday,
the companies said they will expand that relationship, promoting new
releases from Warner's label groups, including Atlantic Recording, Elektra
Entertainment Group, London-Sire and Warner Bros. Records. The artists that
are expected to participate include Barenaked Ladies, Bjork, REM and Tracy
AOL said the new releases will be available via the music and entertainment
channels of its Internet service as well as its two music services,
Winamp.com and Spinner.com.
The announcement comes shortly after AOL Time Warner picked former BMG Entertainment
executive Kevin Conroy to head AOL's online music initiatives.
Conroy could not be immediately reached for comment.
"This is clearly the first fruit of the Kevin Conroy regime," said Aram
Sinnreich, senior analyst at Jupiter Media Metrix. "AOL is going to have to
walk the fine line between taking advantage of its corporate ownership of
Warner Music and excluding the major labels without whom you can't build a
successful music destination."
Among the announcements Wednesday, TiVo said that its ties to AOL Time
Warner will be tightening.
The announcement includes an enhanced multimillion-dollar marketing
campaign for San Jose, Calif.-based TiVo across the media giant's online,
print and TV properties. The goal is to make consumers more aware of the
benefits of TiVo's digital video recorder service, which allows subscribers
to record TV programs to a hard drive.
Research company IDC estimates that over 50 percent of TV households in the
United States are not aware of digital video recorder services.
Mary Joyce Scafidi, an analyst at IDC, said that closer ties to AOL Time
Warner may give TiVo a better chance of being integrated into an
interactive TV service.
"The more of these services that can converge into a single device the
better," said Scafidi. "No one wants to have several boxes, each doing
their own thing, attached to their TV."
She went on to say that by combining the services, "companies can also
combine marketing efforts and help these types of services receive mass market
In addition, AOL Time Warner said HBO would have the rights to releases
from Universal Pictures, and announced the expansion of Time Warner Cable's
Internet telephony trial to Rochester, N.Y.
Staff writer Richard Shim contributed to this report.