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Germany's Media Giants Unite with America Online for Europe-wide Interactive Networks

Strategic Insights

— 2 min read

Germany's largest media groups and the country's biggest telecommunications company, Deutsche Telekom, have agreed to join forces with America Online Inc. to offer Europe-wide interactive communications networks. This strategic alliance aims to counter Microsoft Corporation's growing dominance in Europe's online market. The deal brings together Bertelsmann A.G., Axel Springer Verlag A.G., and Deutsche Telekom A.G. to create the largest support group for any computer on-line service to date.

Key Takeaways:

  • The alliance between Bertelsmann, Axel Springer, and Deutsche Telekom creates a massive support group for America Online's Europe-wide interactive networks, making it the dominant force in Europe's fast-developing interactive market.
  • Deutsche Telekom is planning to buy a 5 percent stake in America Online, with a total investment value of at least $130 million based on America Online's stock market value.
  • The synergy between Deutsche Telekom's low-cost telecommunications access and America Online's global reach in the online business is expected to be enormous, with an estimated value of $20 billion in Europe alone in five years.
  • The partnership will have to be approved by anti-cartel authorities in Bonn and the European Union's headquarters in Brussels before it can proceed.
  • Microsoft Corporation's growing presence in Europe, with over 500,000 online customers since the introduction of Windows 95, has prompted the alliance between Bertelsmann, Axel Springer, and Deutsche Telekom.
  • America Online has more than four million subscribers worldwide, with a significant majority in the United States.
  • Germany's T-Online, Deutsche Telekom's dominant online business, has almost 900,000 subscribers, mostly business customers using the system for electronic banking and online reservations services.
  • The partnership will purchase one-third interest in T-Online, providing America Online with a stronger presence in Germany's online market.

Statistics:

  • Estimated 11 million customers worldwide subscribe to a commercial online service.
  • The on-line business is expected to grow 30% in revenue to $1.4 billion in 1995 alone.
  • Microsoft's on-line service has attracted over 500,000 online customers since the introduction of Windows 95 in August.
  • America Online has more than four million subscribers worldwide, with a majority in the United States.
  • Compuserve has 3.8 million customers, and Prodigy has over 1.2 million subscribers worldwide.
  • The European online market is predicted to be worth $20 billion in five years.
  • Deutsche Telekom's on-line business, T-Online, has almost 900,000 subscribers in Germany.
  • The partnership's synergy is expected to generate enormous revenue, with an estimated value of $20 billion in Europe alone in five years.

Sources:

  • "Germany's Media Giants Unite with America Online for Europe-wide Interactive Networks" (no date)
  • Arlen Communications Inc. (no date)
  • America Online Inc. (no date)
  • Deutsche Telekom A.G. (no date)
  • Bertelsmann A.G. (no date)
  • Axel Springer Verlag A.G. (no date)

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