SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 17, 2000
AMERICA ONLINE, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 001-12143 54-1322110
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
22000 AOL Way, Dulles, Virginia 20166
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (703) 265-1000
Item 5. Other Events.
On March 17, 2000, America Online, Inc. ("America Online ") and
Bertelsmann AG ("Bertelsmann ") announced that they had entered into agreements
for (i) a strategic alliance relating to the distribution by America Online of
Bertelsmann content, the distribution by Bertelsmann of America Online services
and the cross-promotion of their respective services and (ii) a put and call
arrangement for America Online to purchase, in two installments, Bertelsmann's
50% interest in AOL Europe S.A. ("AOL Europe ") for consideration ranging from
$6.75 billion to $8.25 billion, payable at America Online's option in cash,
America Online stock (or AOL Time Warner Inc. stock assuming the merger of
America Online and Time Warner has closed) or a combination thereof. Bertelsmann
has the right to require America Online to purchase a portion of Bertelsmann's
interest in AOL Europe on January 31, 2002 and the remainder on July 1, 2002. If
Bertelsmann fails to exercise its put rights, America Online has the right to
purchase Bertelsmann's interests in AOL Europe. In addition, America Online is
to take immediate ownership of Bertelsmann's 50% interest in the parties' AOL
Australia joint venture, subject to receipt of necessary regulatory approvals. A
copy of the joint press release of AOL and Bertelsmann is included herein as
Exhibit 99.1. The joint press release is incorporated by reference into this
Item 5 and the foregoing description of such press release is qualified in its
entirety by reference to such exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
99.1 Joint Press Release, dated March 17, 2000, of America Online,
Inc. and Bertelsmann AG.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 23, 2000
AMERICA ONLINE, INC.
By: /s/J. Michael Kelly
Name: J. Michael Kelly
Title: Senior Vice President, Chief
Financial Officer and Assistant
Secretary
EXHIBIT INDEX
Exhibit
Number Description
99.1 Joint Press Release, dated March 17, 2000, of America Online,
Inc. and Bertelsmann AG.
Exhibit 99.1
BERTELSMANN AND AMERICA ONLINE ANNOUNCE LAUNCH OF STRATEGIC GLOBAL
ALLIANCE AND PLAN TO RESTRUCTURE JOINT VENTURES $250-Million, Four-Year
Alliance to Expand Distribution of Bertelsmann's Leading Media Content and
E-Commerce Properties Over America
Online's Interactive Brands Worldwide
GUTERSLOH, GERMANY and DULLES, VA, March 17, 2000 -- Bertelsmann AG and
America Online, Inc. (NYSE: AOL) today announced a new strategic global alliance
to expand the distribution of Bertelsmann's leading media content and e-commerce
properties over America Online's interactive brands worldwide, and an agreement
to restructure their interests in the AOL Europe and AOL Australia joint
ventures.
Under the four-year alliance valued at $250 million, Bertelsmann will
become a preferred provider of media content and e-commerce to the more than 23
million members of America Online's interactive services and over 135 million
consumers of its Web-based brands. Bertelsmann's music, magazine, book, and
other entertainment properties, its book and music clubs, and its e-commerce
sites will be featured on the AOL, CompuServe and Netscape Online interactive
services worldwide as well as AOL Instant Messenger, ICQ, AOL.COM, Digital City,
Spinner, Winamp and its other global Internet properties.
Bertelsmann and America Online will also cross-promote each other's
brands across their services and properties, and Bertelsmann will provide
broadband distribution for America Online and AOL Europe brands.
The companies also have agreed to restructure their ownership interests
in AOL Europe and AOL Australia. The transaction involves using put and call
mechanisms resulting in a cost of $6.75 billion to $8.25 billion to America
Online in order to ultimately buy out Bertelsmann's share in the coming years,
if the options are exercised. Payment, in either cash or stock at America
Online's discretion, would be made after January 31, 2002.
With this new relationship, America Online will work even more closely
with AOL Europe's strong local management teams. As Europe's leading Internet
and e-commerce services company, AOL Europe now reaches more than 3.8 million
households through its multiple brands, including more than 3.4 million paying
members of AOL and CompuServe, and more than 400,000 Netscape Online registered
users. In addition, America Online is to take immediate ownership of
Bertelsmann's 50% interest in AOL Australia, subject to receipt of necessary
regulatory approvals.
Bertelsmann said it would use any resources resulting from this
agreement to build its existing e-commerce business and provide seed money for
new e-commerce and content activities. For America Online, as it pursues its
worldwide growth strategy for all of its brands, this agreement positions the
Company to more aggressively serve the global market. By 2004, there will be
twice as many online consumers outside the US than inside, with the total in
Europe expected to quadruple to 125 million. And, over the next five years,
international online advertising is forecast to expand by 80% annually.
Thomas Middelhoff, Bertelsmann's Chairman and Chief Executive Officer,
said: "By forging this new global strategic alliance, Bertelsmann will have the
largest worldwide distribution of any e-commerce company. In addition, by
restructuring our joint venture relationships with America Online, we will gain
substantial new resources to focus on our primary goal to fully digitize
Bertelsmann's media properties and build our position as one of the world's
leading Internet content and e-commerce companies."
Steve Case, Chairman and Chief Executive Officer of America Online,
said: "We are extremely pleased to extend our long relationship with Bertelsmann
with this new strategic global alliance that will greatly benefit our members
and other Internet consumers around the world. America Online and Bertelsmann
have built AOL Europe into the leading pan-European Internet provider in one of
the world's fastest growing markets and launched an exciting new service in
Australia. We are fully committed to continuing to focus our resources, support
and management to extend the growth of these businesses and make the medium even
more central to consumers' daily lives in those promising markets."
Bob Pittman, America Online's President and Chief Operating Officer,
said: "These agreements demonstrate our confidence in both our Bertelsmann
partnership and the continued successes of AOL Europe and AOL Australia. Our new
alliance will deliver Bertelsmann's world-class content and e-commerce
properties to the tens of millions of consumers of our multiple brands around
the world. We will work closely with our terrific local management teams to
build on our successes in Europe and Australia. In particular, we are excited
about accelerating AOL Europe's growth through the expansion of our leading
interactive brands and services to new European markets and pursuing our AOL
Anywhere strategy with such new platforms as wireless."
America Online and Bertelsmann also announced that Michael Lynton,
President of AOL International, will become acting Chief Executive Officer of
AOL Europe. AOL Europe's current President and Chief Executive Officer, Andreas
Schmidt, will continue working with the Company during a transition period
before returning to Bertelsmann.
Mr. Lynton said: "We thank Andreas for assembling a talented, dedicated
and hard-working European staff that has built AOL Europe into the Internet
powerhouse that it is today. Under his leadership, AOL Europe now is better
positioned than ever to take full advantage of the great opportunities before
us."
Bertelsmann's global strategic alliance with America Online will
include:
Bertelsmann E-Commerce Properties: The partners plan to extend their
existing e-commerce agreements, as well as enter into new agreements to
provide carriage for getmusic.com, AndSold, evenbetter.com and
Bertelsmann's music and books clubs on America Online and AOL Europe
services and products, including digital delivery of media content such
as digital downloading of music.
Bertelsmann Content: Bertelsmann will make its digital content
available to America Online and AOL Europe on preferred terms --
including using its local media assets to provide branded localized
content.
Bertelsmann Preferred Interactive Services: Bertelsmann will designate
AOL, CompuServe and Netscape Online as its "Preferred Interactive
Services."
Cross-marketing: Bertelsmann, AOL Europe and America Online will enter
into a series of marketing relationships -- including bundling deals to
cross-promote each other's services and products to drive growth in AOL
Europe and America Online subscribers, as well as Bertelsmann's
magazines, music and book clubs, and e-commerce properties.
Broadband and Communications Tools: Bertelsmann will provide broadband
access through Bertelsmann Broadband Group Platform and Service for
America Online and AOL Europe's interactive services, and the two
companies will explore giving Bertelsmann use of America Online
communications tools including e-mail, AOL Instant Messenger, ICQ and
chat.
Digital Rights Management Systems: America Online and Bertelsmann will
work together on digital rights management issues, including evaluating
Intertrust and Reciprocal for secure downloading and financial clearing
of all digital content including software. In addition, Bertelsmann
will ensure that any DRM system it uses will be ready to use with AOL
media players.
About AOL Europe
Formed in 1995, AOL Europe operates the leading AOL, CompuServe and
Netscape Online services and AOL Instant Messenger, as well as the AOL and
CompuServe portals in nine countries and four languages across Europe. AOL is
the service for the whole family, providing its members with interactive
education, entertainment, financial and information content while giving access
to a global online community. Last fall, Media Metrix ranked the AOL service
across Europe as #1 in online usage with AOL members averaging 30 minutes daily
within the AOL service's world-class exclusive content and communities. That
compares with the three minutes or less that users of other European ISPs and
portals spend within their proprietary content. CompuServe is aimed at the
corporate customer and "new professional" user offering specialized information,
large-scale databases, unmatched forums and professional communication tools.
Netscape Online, AOL Europe's subscription-free online service, is targeted at
the UK "value" sector and provides pure, high-performance Internet access.
Building on its AOL Anywhere strategy, AOL Europe last month announced wireless
agreements with Nokia, Ericsson and RTS Wireless to extend the joint venture's
leadership in interactive brands, services and features to the wireless
platform. AOL Europe's pan-European staff totals more than 2,000 people.
About Bertelsmann AG
Bertelsmann AG is the fourth-largest media company in the world, with
consolidated revenues of approximately US $16.4 billion. The company has
significant interests in all areas of media, including book, magazine and
newspaper publishing, music, television, multimedia, film and radio. With more
than 600 individual companies, Bertelsmann currently employs nearly 72,000
people in 53 countries.
About America Online, Inc.
Founded in 1985, America Online, Inc., based in Dulles, Virginia, is
the world's leader in interactive services, Web brands, Internet technologies
and e-commerce services. America Online, Inc. operates:
two worldwide Internet services, America Online, with more than 21
million members, and CompuServe, with more than 2.5 million members;
several leading Internet brands including ICQ, AOL Instant Messenger,
Digital City Inc.; the Netscape Netcenter and AOL.COM portals;
Netscape Navigator and Communicator browsers; AOL MovieFone;
Spinner.com, and Nullsoft Winamp. Through its strategic alliance with
Sun Microsystems, the company develops and offers easy-to-deploy,
end-to-end e-commerce and enterprise solutions for companies operating
in the Net Economy.
Contact Information:
AOL:
Kirsten Powers 703/265-1746
Bertelsmann:
Manfred Harnischfeger 49-52-41-80-2765
