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CompuServe, Time settle suit

Both sites agree to abandon exclusive content rights.

Time and CompuServe (CSRV) today settled a lawsuit the magazine filed against the beleaguered online service last month.

Time had sued CompuServe to prevent the online company from canceling Time's presence on the service and to force CompuServe to pay the remainder of funds owed for a two-year contract.

The magazine will again run on CompuServe as of today.

Under the agreement, both parties will give up exclusive rights to content. Time had been seeking $3.5 million in payments for this year, but the companies refused to disclose the financial terms of the settlement.

The settlement also calls for the Time area on CompuServe's site to include an online version of the current edition of Time as well as features and stories from Time Daily and Time Digital. Time will continue to manage the Time Forum areas.

"We are pleased that we have reached a mutually satisfactory agreement that allows us to further our valued relationship with Time," Denny Matteucci, CompuServe's president of interactive services, said in a statement.

Time left America Online (AOL) in November 1995 and joined CompuServe in March 1996 after being aggressively pursued by the online service.

But in January, halfway through its contract, CompuServe sent Time a notice seeking to terminate the $7 million two-year agreement, according to Time. CompuServe had contended that there was a provision in the contract that allowed them to terminate the service with 30 days of notice and that it owed Time $1.5 million to buy out the contract.

This suit had no bearing on CompuServe carrying other Time Warner publications such as Sports Illustrated and Money.

While the suit settles a brief and interesting chapter on how online content is handled and who owns it, it is hardly CompuServe's biggest worry. The service has been having financial troubles for several months, and rumors of its impending buyout by online giant AOL are just beginning to settle into the background.

In November, CompuServe announced that it would refocus itself to serve small and medium-sized businesses, a potentially lucrative market. But so far, it has yet to announce a new service. Meanwhile, the company CEO departed in February and released another quarter of poor earnings.