[Random-bits] AOL/DirectTV and FTC Joint Venture Guidelines

[James Love]

AOL/Time Warner, AT&T and Direct TV

There have been several stories mentioning AT&T acquistion of Media One
giving AT&T an ownerhsip interest in many Time Warner properties.   This
from a June 21, 1999 on AOL's agreement to invest $1.5 billion with GM
for a deal with Hughes and DirectTV -- a  direct competitor with Time
Warner and AT&T cable properties.   It is becoming difficult to figure
out which company's are really independent these days.  Which is one
reason that the FTC's decision to extend the period for comments on the
joint venture guidelines is a good thing.

Here is the URL for the FTC's proposed "ANTITRUST GUIDELINES FOR
COLLABORATIONS AMONG COMPETITORS,"

http://www.ftc.gov/os/1999/9910/jointventureguidelines.htm




Here is the URL for the AOL/DirectTV deal:

http://www.direcpc.com/consumer/scoop/pr11.html




AMERICA ONLINE AND HUGHES ELECTRONICS FORM STRATEGIC
ALLIANCE TO MARKET UNPARALLELED DIGITAL ENTERTAINMENT
AND INTERNET SERVICES 

Will Accelerate Growth of DIRECTV, AOL TV and Launch AOL-Plus
High-Speed Internet Service via DirecPC Nationwide Satellite
System 

AOL to Make $1.5 Billion Strategic Investment in Hughes

DULLES, Virg., and EL SEGUNDO, Calif., June 21, 1999 -- America
Online, Inc. (NYSE:AOL), the world's leading interactive services
company, and Hughes Electronics Corporation (NYSE:GMH), the
world's leading provider of digital television entertainment and
satellite-based data services, today announced a strategic
alliance to develop and market uniquely integrated digital
entertainment and Internet services nationwide.

The Companies said that this alliance will accelerate subscriber
growth and revenue-per-subscriber for Hughes' DIRECTV® television
entertainment service and DirecPC® satellite-based broadband
Internet delivery system, as well as extend the reach of America
Online's developing AOL TV interactive television and high-speed
AOL-Plus services. America Online and Hughes also plan to jointly
develop new content and interactive services for the U.S. market
and elsewhere in the world.

This new alliance builds on the Companies' earlier agreement to
develop a "combination" set-top receiver to make DIRECTV/AOL TV
available to consumers next year. The Companies will launch
an extensive cross-marketing initiative to package and extend the
reach of both AOL TV and DIRECTV. 

Hughes and America Online will market the DIRECTV/AOL TV package
to America Online's more than 16 million AOL and CompuServe
members in the United States, as well as to millions more
consumers of its Internet brands. Hughes also will market AOL TV
to its more than 7 million current DIRECTV subscribers, and to
millions of potential new subscribers through its extensive
network of retail outlets.

The Companies will also make the AOL-Plus broadband service
available nationwide via the DirecPC satellite Internet network
by early 2000. This initiative builds on America Online's
recently announced partnerships with Bell Atlantic and SBC
Communications to deliver DSL broadband connectivity to AOL
members. The DirecPC network provides broadband download
speeds up to 14 times faster than the standard 28.8
kilobits-per-second analog modem. AOL-Plus members will be able
to transmit information back over standard telephone lines at
speeds as fast as 56.6 kbps.

Hughes Network Systems, a unit of Hughes, provides the DirecPC
system and service, and will design and initially manufacture the
combination DIRECTV/AOL TV set-top receiver.

The alliance will also enhance the development of Hughes'
next-generation satellite system for two-way, broadband
connectivity, known as Spaceway?, scheduled to launch in 2002.
Hughes previously announced a $1.4 billion investment to design,
manufacture and launch the North American system and accompanying
ground infrastructure. 

Under the agreement, America Online will make a $1.5 billion
strategic investment in a General Motors equity security, which
carries a 6-1/4% coupon rate, that is automatically convertible
into GM Class H common stock (GMH) at a 24 percent premium in 
three years. GM will immediately invest the $1.5 billion in a
security of Hughes under similar terms where it will be employed
to implement the strategic alliance between AOL and Hughes. AOL
said the investment would be non-dilutive to its earnings. 

   [snip]

-- 
James Love
http://www.cptech.org
mailto:love@cptech.org
voice 1.202.387.8030