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Wednesday, November 3, 1999 Published at 20:03 GMT

Business: The Company File

AOL links up with Blockbuster

By the BBC's Kevin Anderson in Washington

America Online will invest $30m in the Internet unit of home video distributor Blockbuster.

In addition to giving Blockbuster access to AOL's millions of users, the two companies will jointly develop broadband content and delivery services over the course of the three-year alliance.

A new co-branded AOL/ will be relaunched by the end of November, and AOL members will have access to Blockbuster's home video collection.

Blockbuster will distribute free AOL 5.0 software at its approximately 4,000 locations in the US.

Blockbuster will also increase promotion of AOL on its in-store television network, in television advertisements and on television programmes such as the Blockbuster Entertainment Awards.

AOL gains speed This is just the latest move by AOL to position itself as a content provider in the broadband market.

So far shut out from serving its content through broadband cable Internet services, AOL has partnered with several regional telecommunications providers for access to their high-speed digital subscriber lines (DSL).

AOL also plans to launch an interactive television service using the DirecTV satellite service.

The alliance with Blockbuster could provide high-quality content for these broadband systems. Troubled retailer Blockbuster could use a boost from the world's largest online services provider.

Blockbuster is the largest video rental chain in the world, with 65 million members world-wide. In addition to its locations in the US, it has almost 2,250 stores in 25 other countries.

But its future is far from secure.

In 1998, it suffered more than $330m in losses and sold its unprofitable music unit, Blockbuster Music, to Wherehouse Entertainment.

Blockbuster may also be set adrift by its parent company, entertainment giant Viacom.

Viacom bought Blockbuster in 1994 for $8.4bn, but sold 20% of the company to the public in 1999.

Viacom has indicated that it might sell its remaining interest in Blockbuster by the end of the year.

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