Two media companies with the strongest brands in their
respective industries signed a marketing alliance last week, when America Online Inc.
agreed to use TV Guide Inc. subsidiary TV Guide Online Inc. as its TV-listings provider
starting this fall.
TV Guide did the deal to help drive more eyeballs to its tvguide.com
Web site, CEO Joe Kiener said. "Given the dominance of our brand, we wanted dominant
distribution, too," he said, adding that with 20 million members, "AOL provides
significant reach."
No cash changes hands in the deal, Kiener said. While TV
Guide will become the exclusive TV-listings provider for AOL, TV Guide retains its rights
to negotiate content deals with other online providers.
"AOL TV" was not part of the deal. AOL has signed
other guide providers -- including TV Guide rival Gemstar International Group Ltd. -- for
its proposed interactive-television service.
"It's a terrific deal for both companies,"
Dove Associates managing director Bob Davis said. "My guess is that they'll get
a lot of hits on it."
In addition to general TV listings, TV Guide will create
content specific to certain AOL sites. For "Digital City" sites, for example, TV
Guide will generate local listings to help AOL subscribers find their favorite shows while
they're traveling.
It will also tailor content for eight age- and
genre-specific AOL channels: entertainment, families, teens, kids only, AOL Live, news,
personal finance and sports.
And TV Guide will bring daily online chats with television
stars to AOL.
The two companies will pursue joint advertising and
electronic-commerce opportunities for their co-branded sites, but TV Guide will continue
to derive revenues from its own Web site.
TV Guide's stock price shot up $3 (11 percent) to
$31.38 on the news, and it rose as high as $33.75 last Wednesday.
Stacy Bingler Forbes, an analyst who follows TV Guide for
Janco Partners in Denver, said AOL's name "obviously brings a lot of attention
to the stock." While the revenue impact of the deal was hard to gauge, the extra
traffic to TV Guide's Web sites could boost advertising and e-commerce, she added.
Investors might have been slow to catch on to the previous
day's news -- that TV Games Network, TV Guide's new horse-racing network, signed
a distribution deal with AT&T Broadband & Internet Services -- Forbes added.
Despite AOL's often-contentious relationship with the
cable industry, Kiener said he didn't think the TV Guide deal would upset cable
operators. "Hopefully, people who are online will be driven back to television, which
ultimately helps cable," he added.
AOL will terminate its online deals with its current
TV-listings partners, spokeswoman Kathie Lentz said.
