AOL, Blockbuster Form Promotional Alliance

America Online Inc. and Blockbuster Inc. formed a three-year partnership Wednesday in which Blockbuster will become the No. 1 home video supplier on AOL’s entertainment channel.

As part of the deal, AOL (AOL) will make a $30 million equity investment in the home video powerhouse, which will be used for the development of broadband content and delivery for both companies. AOL will also be promoted by Blockbuster (BBI) through key distribution centers.

In addition, the agreement will give AOL members access to the video company’s premier
entertainment products, by going to a co-branded AOL/ Web site, or using
AOL keyword: will be relaunched and available
to AOL members at the end of November.

Blockbuster will engage in major
off-line promotion of AOL, including its AOL 5.0 software and will distribute
free AOL 5.0 CD-ROMs at approximately 4,000 corporate Blockbuster locations in the U.S.

“This strategic alliance between AOL and Blockbuster creates a new force in the home
entertainment industry,” said John Antioco, chairman and chief executive officer of Blockbuster.

“The coupling of AOL’s leadership in interactive services with our strength in home entertainment
provides us both with immediate opportunities to offer new services to both our memberships
and creates a foundation for the two companies to capitalize on emerging home
entertainment technologies.”

Bob Pittman, America Online (AOL)
president and chief operating officer, said the company was thrilled to
have developed the innovative alliance with Blockbuster.

“Blockbuster will make it easy and convenient for our members to find new
and classic videos from its industry-leading roster of titles,” Pittman

“With a powerful consumer brand name and extensive U.S. retail
presence, Blockbuster also will effectively promote our AOL service and new
AOL 5.0 software to their customers.”

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