AOL and Its Cable Sibling to Cross-Promote.
More than two years after the AOL-Time Warner
merger, America Online Inc. and Time Warner Cable yesterday took
a small first step toward promoting each other's high-speed
Internet services.
As part of a new marketing agreement, AOL will
begin providing a sampling of its sports, music and other
content to Time Warner's 3.2 million high-speed cable
subscribers. If they like it and want more, these subscribers
will be encouraged to sign up for AOL for Broadband, the
$14.95-a-month service that the Dulles-based company is pushing
as a growth vehicle to offset the continuing decline in its core
dial-up Internet service.
The announcement came on the same day that AOL
chief executive Jonathan F. Miller met with Time Warner Inc.'s
board of directors in New York to talk about AOL's future. And
it followed years of fierce resistance from Time Warner Cable
officials, who have made it clear that they intend to continue
using Road Runner as the online interface of choice for their
high-speed Internet subscribers, and wanted nothing to do with
AOL.
Although AOL and Time Warner Cable are owned by
the same company, the corporate behemoth is operated largely as
a holding company where divisions are run autonomously and are
not forced to cooperate with one another.
But in this case, Time Warner Cable officials
said they cut the deal with AOL because their high-speed
subscribers want more of the kind of rich media content that AOL
has on its service.
"It is exciting for us to get that content," said
Jeffrey M. King, an executive vice president of Time Warner
Cable. "Through that we become a sales channel for AOL within
Time Warner, which is a positive thing for us."
"It is mildly positive. It is not a barn burner,"
said Jupiter Research analyst David Card. "The big symbolic
thing would be if there was no such thing as Road Runner, and
the AOL Welcome Screen is what you got if you were a Time Warner
high-speed cable subscriber."
Time Warner Cable is also creating a new
all-music, video-on-demand cable channel called My MC, which
stands for My Music Channel. The new channel will feature
in-studio sessions, concerts and music videos assembled by AOL
through its relationships with BMG Entertainment, Sony Music
Entertainment Inc., Universal Music Group and Warner Music
Group. Viewers will be able to select which videos and concerts
they want to watch in a commercial-free environment, where the
only promotion will be to encourage them to sign up for AOL for
Broadband.
"We are excited to be working in partnership with
Time Warner Cable on these important new offerings," said AOL
Executive Vice President Kevin Conroy. "By providing programming
otherwise available only to AOL members, we can showcase . . .
AOL for Broadband to millions of consumers."
As part of the agreement, Time Warner Cable, the
nation's second-biggest cable company, will receive a fee for
each of its customers who sign up for AOL. In addition, AOL will
make it easier for people who live in areas where Time Warner
Cable is offered to sign up for Time Warner's high-speed cable
service and AOL for Broadband simultaneously.
The moves reflect a marketing shift by AOL, which
previously has not made its high-speed content available for
sampling to non-America Online users. But the Dulles-based
company, which has 2.7 million high-speed customers among its
24.3 million subscribers, is looking for new ways to grow as
millions of its dial-up customers flee for faster or cheaper
Internet services.
Yesterday, AOL's Miller presented the Time Warner
board of directors with the outline of a multi-part strategy to
increase America Online's subscriber base and advertising.
Initial reports from New York were that Miller's session with
directors was positive.
"I think he did very well," said one company
source familiar with the board's deliberations. "The board was
impressed at the work that was done there and came away with a
more optimistic view. He laid out his plan about how growth
could be reached, and it was well received."
Federal probes into AOL's accounting have created
ill will at Time Warner Cable because the Securities and
Exchange Commission will not allow the cable division to be spun
off as a separate company, or issue new shares, while the
investigations are pending.
Analyst Card said there appears to be a slightly
better mood across the rival Time Warner divisions. The message,
Card said, is, "We don't all hate each other."
