AUCTION CHANNEL TO BE BOUGHT.

Byline: Dave McNary Staff Writer

Brilliant Digital Entertainment, moving to take advantage of the boom in Internet auctions, announced Tuesday it will buy the London-based Auction Channel for $7.3 million in stock.

The deal vaults 3-year-old Brilliant into the same league as Internet heavyweights such as Amazon.com and eBay in offering online auctions. Brilliant is a Woodland Hills-based a software developer best known for selling movies that contain potentially hundreds of plot-twist choices.

``Brilliant is the perfect partner for The Action Channel,'' said Jason Gleave, founder and managing director of the channel. ``The company has the technology we can use to enhance auction events and access to capital to support the accelerated growth of our business.''

The deal gives The Auction Channel a 9 percent stake in Brilliant and comes five weeks after five high-profile investors put $4.3 million into Brilliant, which obtained a $6 million line of credit. Brilliant stock, which jumped 35 percent during that single session to $6.75, was off 62.5 cents to $6.375 on Tuesday.

Gleave, in a telephone interview, said the deal is a fast-track method of getting the channel into the U.S. market. ``We've been focused on the European market because the stronghold on fine art auctions is here, but it's become urgent for our auction partners that we establish ourselves in the United States,'' he said.

Brilliant, which lost $1.9 million on revenues of $206,000 in the first quarter, will add about 30 Auction Channel employees to its work force of 70 and plans to open an Auction Channel office in the Los Angeles area within the next 60 days, according to president Kevin Burmeister.

The privately held Auction Channel broadcasts live auctions - now at the rate of two per week - over satellite, cable and the Internet with interactive bidding. In March, its British TV partner Sky Sports attracted more than 750,000 viewers to its Soccer Legends auction conducted by the Bonham's house. It recently broadcast Christie's first televised auction of tennis memorabilia.

Burmeister said Brilliant, which began selling animated Multipath Movies on the Internet and through retailers in December, will set up joint ventures with telecommunications and media partners for live auction broadcasts. Burmeister said the acquisition is a logical way for his company to expand its 3-D graphics and online business capabilities.

``Brilliant Digital has specialized in content that's immersive and stimulates participation,'' he said. ``What was fascinating to us about The Auction Channel was the level of participation from viewers.''

The idea of Internet auctions has received a major boost from eBay and from Seattle-based bookseller Amazon.com, which formed an alliance last week with Sotheby's for an online service that will start in September. Gleave insisted he has been cheered by the popularization of the concept.

``We're very pleased to see these kind of announcements being made,'' he said of the Amazon-Sotheby's deal. ``When I began approaching houses in 1996, I got a lukewarm reception because it was very difficult to explain that this was going to be a viable business. It took us about two years of broadcasting auctions and developing relationships to show that online auctions are part of the future.''