EA to play games with AOL

NEW YORK -- Electronic Arts Inc. has agreed todeliver online games and interactive entertainment content toAmerica Online Inc.

NEW YORK -- Electronic Arts Inc. has agreed to deliver online games and interactive entertainment content to America Online Inc. under a five-year partnership, the companies said on Monday.

Redwood City, Calif.-based Electronic Arts (Nasdaq: ERTS), the world's No. 1 video game maker, said it had formed a separate business division for online gaming and would issue new shares tracking the division's performance.

It also said it had agreed to buy a gaming division of media conglomerate News Corp. and said both America Online (NYSE:AOL) and News Corp. would buy some of the new tracking shares.

Under the deal with America Online, the No. 1 Internet service company, Electronic Arts will be exclusively responsible for content on the AOL Games Channel and for all game content on America Online brands AOL.COM, CompuServe, Netcenter and ICQ.

Electronic Arts will guarantee $81 million to Dulles, Va.-based America Online, over the term of the agreement. No other financial arrangements were disclosed.

A new gaming site will be launched on the AOL service next summer with a broad offering of products and services for game players of all ages and interests, the companies said. Electronic Arts will provide similar content with a simultaneous relaunch of its own Web site.

The sites will provide new and current Electronics Arts games plus products developed exclusively for AOL.

Expects to file
Electronic Arts said it expects to file a proxy statement with regulators within the next few months regarding plans for the tracking stock for the online gaming division, which will include sites set up under the agreement with America Online.

America Online will buy 10 percent of the new class of stock and warrants for an additional 5 percent. A News Corp. unit will buy another 5 percent, and the remaining shares will be retained by Electronic Arts and employees of the new division. Terms of the stock sales were not disclosed.

The News Corp. gaming division to be sold to Electronic Arts is Kesmai Corp., a Charlottesville, Va., developer of multi-player online entertainment. Terms of the sale were not disclosed.

Electronic Arts shares closed at 92 on the Nasdaq stock market on Friday. America Online finished at 158-3/16 on the New York Stock Exchange. News Corp. closed at 34-3/16 on the NYSE.

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