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AOL, Time Considering Content Deal

November 25, 2002

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NEW YORK (AP) _ America Online and Time Inc. are considering a content deal that would bring the two units of AOL Time Warner closer together, while offering a potentially significant lift to the struggling Internet division.

The two businesses are in discussions about making Time Inc.’s magazine content available via America Online, rather than the entire Internet, a person familiar with the matter said.

Currently, most of Time Inc.’s magazines, which include People, Time, Sports Illustrated and Cooking Light, can be read for free online. A deal making that content available exclusively through America Online could provide a significant boost to the Internet service provider, which is seeking to attract new subscribers.

The proposal is expected to be discussed at a Dec. 3 meeting with analysts that America Online’s new chief executive, Jon Miller, has scheduled to discuss the division’s plans for the future.

America Online currently has 35 million subscribers, but analysts have questioned its long-term prospects because of concerns that subscription and advertising growth are slowing. They are particularly concerned about the company’s high-speed Internet access service, which the company has touted as key to its future, but is still pricier than much of the competition. AOL executives have said they believe the key to its success is developing unique content that consumers can’t find anywhere else on the Web. A deal with Time Inc. could help do that.

America Online is also under pressure because of a government investigation into its accounting practices, scrutiny that has hurt its corporate parent’s stock price, which has tumbled about 50 percent this year.

In late morning trading on the New York Stock Exchange, shares of AOL Time Warner rose 20 cents to $16.09.

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