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
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
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.