America Online and Hughes Electronics Form Strategic Alliance to Market Unparalleled Digital Entertainment and Internet Services.DULLES, Va. and EL SEGUNDO El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and , Calif.--(BUSINESS WIRE)-- June 21, 1999-- Will Accelerate Growth of DIRECTV, AOL TV AOL TV was the name of both a thin client which uses a television for display (rather than a monitor), and the online service that supports it, both of which were launched in June 2000 to compete with WebTV. The product and service were developed by America Online. , and Launch AOL-Plus High-Speed Internet See broadband. Service via DirecPC Nationwide Satellite System AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. to Make $1.5 Billion Strategic Investment in Hughes America Online See AOL. , Inc. (NYSE NYSE See: New York Stock Exchange :AOL), the world's leading interactive services company, and Hughes Electronics Corporation (NYSE:GMH GMH General Motors Holden's ), 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 See broadband. delivery system, as well as help develop and extend the reach of America Online's AOL TV interactive television and AOL-Plus high-speed Internet 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 U.S., 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 AOL-Plus 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 (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. Communications to deliver DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary 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 A common device that converts the computer's digital pulses to tones that can be carried over analog telephone lines. See 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 Hughes Network Systems, LLC (HNS), is a provider of broadband satellite network products for businesses and consumers. HNS pioneered the development of high-speed satellite Internet access services and IP-based networks with its original DirecPC service but which it now markets , 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(tm), scheduled to launch in the year 2002. Hughes is investing $1.4 billion to design, manufacture and launch the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. 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 Coupon rate In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year. , that is automatically convertible into GM Class H common stock (GMH) 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. America Online said the investment would be non-dilutive to its earnings. Over the next three years, Hughes is making a major commitment to market AOL TV and AOL-Plus, as well as accelerate the growth of DIRECTV and DirecPC. Among its planned expenditures are: -- More than $500 million for AOL-Plus via DirecPC through both America Online brands and Hughes retail channels; -- Up to $500 million for DIRECTV, including more than $150 million in marketing to AOL members; -- Approximately $400 million for the combined DIRECTV/AOL TV services; and -- Approximately $100 million for DirecDuo, which enables subscribers to access the DIRECTV and DirecPC networks with a single satellite dish satellite dish n. A dish antenna used to receive and transmit signals relayed by satellite. satellite dish A parabolic antenna used to receive signals relayed by satellite. . Hughes and America Online have agreed to explore making broadband satellite offerings available in Latin America as that market evolves. Alliance Advances "AOL Anywhere" and Hughes Internet and Interactive Strategies Steve Case, Chairman and Chief Executive Officer of America Online, Inc., said: "Our strategic alliance with Hughes is a major step forward in our 'AOL Anywhere' strategy, as well as a valuable e-commerce opportunity and yet another addition to our broadband capabilities. It benefits America Online across all fronts and puts more pieces in place for the next wave of interactive services. AOL TV and DIRECTV are a winning combination, and we believe that AOL members and DIRECTV subscribers, as well as other television viewers, will see it the same way." Mr. Case added: "We are committed to providing our AOL-Plus high-speed service over all broadband technologies -- DSL, cable, satellite, and wireless -- as they emerge for the mass market audience. With this alliance, we will be able to offer our members the only broadband connectivity network with a national footprint. Together with our DSL partnerships, this new Hughes alliance will help ensure that millions of AOL members across the U.S. will be among the first to benefit from convenient and easy-to-use broadband Internet access Broadband Internet access, often shortened to just "broadband", is high speed Internet access—typically contrasted with dial-up access over modem. Dial-up modems are generally only capable of a maximum bitrate of 56 kbit/s (kilobits per second) and require the full use of a ." Mike Smith, Chairman and Chief Executive Officer, Hughes Electronics, said: "This is an alliance of the No. 1 brand in interactive services and the No. 1 brand in digital television entertainment. As a result, Hughes will not only accelerate its already record-setting DIRECTV subscriber growth, but we will also attain entirely new revenues from Internet-based service opportunities. "It's another demonstration of Hughes' leadership in digital communications, and our vision of being the premier global provider of integrated entertainment and information products and services. We created the high-power digital satellite television industry five years ago and set a new standard for multi-channel television entertainment. By joining with America Online in this long-term, strategic relationship, we're making it clear that DIRECTV will remain the market leader." Mr. Smith added: "Offering AOL-Plus via DirecPC clearly marks Hughes' commitment to being a leader in the Internet economy. Our technological leadership allowed us to launch DirecPC to the consumer market in 1997, well before any of our competitors. As we offer the power of high-speed, satellite-delivered data services to AOL members, we'll just be scratching the surface of the major role that satellites can and will play in the broadband Internet market." Bob Pittman, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of America Online, Inc., said: "This alliance with Hughes demonstrates America Online's continuing commitment to embracing all mass market technologies that enrich our members' interactive experiences. AOL TV is a natural enhancement for DIRECTV's successful service. And the key to our broadband strategy is to offer our members all the services unique to these higher speeds, in addition to all the narrowband features, services, and content they now receive. "Through this alliance, along with the partnerships we've forged with telecommunications companies, we will now have the ability to offer best-of-breed services ranging from long distance telephone and broadband access to interactive TV and dial-up connectivity at attractive package prices to our members -- making AOL even more central to their daily lives." About America Online 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 17 million members, and CompuServe, with approximately 2 million members; several leading Internet brands including ICQ ("I Seek You") A conferencing program for the Internet from Mirabilis, Tel Aviv, Israel (www.icq.com). It provides interactive chat, e-mail and file transfer and can alert you when someone on your predefined list has also come online. , AOL Instant Messenger See AIM. and Digital City, Inc.; the Netscape Netcenter and AOL.COM portals; the Netscape Navigator and Communicator browsers; and AOL MovieFone, the nation's No. 1 movie listing guide and ticketing service. 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. About Hughes Electronics Corporation Hughes Electronics Corporation is the world's leading provider of digital television entertainment, and satellite and wireless systems and services. The Company's DIRECTV, Inc. unit is the United State's leading digital television entertainment service, with more than 7.3 million subscribers. DIRECTV provides more than 210 channels of sports, entertainment, news, music and family programming, including exclusive and original programming. Hughes also holds major interests in DIRECTV businesses in Latin America and Japan. Hughes owns 81 percent of PanAmSat Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :SPOT), the world's leading commercial provider of global satellite-based communications services. Two other units, Hughes Space and Communications Company and Hughes Network Systems (HNS HNS Hughes Network Systems LLC HNS Hrvatski Nogometni Savez (Croatian Football Federation) HNS Head & Neck Surgery HNS Hughes Network Systems, Inc. ), are leading providers of satellite systems, and ground systems and services, respectively. HNS is the world leader in satellite-based data communications, and provides the DirecPC system and service. DIRECTV is a trademark of DIRECTV, Inc. DirecPC is a registered trademark of Hughes Network Systems. The earnings of Hughes Electronics are used to calculate the earnings per share attributable to GMH (NYSE symbol) common stock. Visit Hughes on the World Wide Web at www.hughes.com (1) (Computer Output Microfilm) Creating microfilm or microfiche from the computer. A COM machine receives print-image output from the computer either online or via tape or disk and creates a film image of each page. . Note to Editors: America Online Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Steve Case and Hughes Electronics Chairman and CEO Mike Smith will discuss the strategic alliance between AOL and Hughes Electronics in a conference call with members of the media at 12:00 PM (Eastern time) today. Reporters in the United States should call 888-753-6315 to participate. Members of the media outside the U.S. should call 415-908-6256. A replay of the call will be available beginning at 2 p.m. until Midnight (Eastern time), June 23, 1999 by dialing 800-633-8284 (619-812-6440 for international calls), pin No. 12611519. |
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