AOL ups stake in video firm

The online giant opts to take an increased equity stake in Videos Now, a Net store set to launch next month.

America Online has opted to take an increased equity stake in Videos Now, sending stock in its parent company higher.

Stock in Digital Courier Technologies--formerly DataMark Holding Incorporated--traded at 12.6875 per share in midday trading today, up 4.3125 or more than 50 percent. Shares reached as high as 13, well over the 52-week high of 10.625.

AOL, which has 12 million subscribers, now will own about 12 percent of the stock in Digital Courier in exchange for increased visibility and advertising on the AOL.com Web site. Videos Now also will be promoted on AOL's proprietary service and the Digital City community guide as part of the three-year agreement.

"We think DCTI is absolutely committed to the medium," said Tom Ziemba, an AOL spokesman. Ziemba said today's agreement provides AOL with warrants to purchase more shares in the future.

Videos Now is set to launch next month, offering 100,000 movies and videos in various formats including VHS, DVD, Laserdisc, Divx, and Beta.

"The hundreds of millions of impressions that AOL has guaranteed Videos Now will enable us to immediately realize significant revenues," Mitchell Edwards, Digital Courier's chief financial officer, said in a statement.

Meanwhile, AOL shares were up 2 percent late today, rallying along with several other Internet firms. AOL stock was up 2.25 to 112.5625. Shares have traded as high as 112.8125 and as low as 31.125 in the past 52 weeks.