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MCI and News Corp. Plan On-Line Services Venture : Computers: British Telecom may join in the deal, the firms' first since MCI announced plans to invest in the Murdoch empire.

August 10, 1995|From Reuters

NEW YORK — MCI Communications Corp. and News Corp. on Wednesday announced a joint venture to provide on-line services and said British Telecommunications may take a stake too.

It is the first major linkup since MCI, the nation's second-largest long-distance firm, announced plans in May to invest $2 billion in Rupert Murdoch's media empire.

The venture will include all the companies' existing on-line operations, they said, including News Corp.'s Delphi Internet Services Corp., which has 100,000 customers.

MCI's Scott Kurnit was named chief executive and president of the joint venture and News Corp.'s Anthea Disney will be its editor in chief.

MCI businesses that will be part of the operation include MCI's Information Services/Entertainment Co., FYI On-line services, MCI's site on the Internet's World Wide Web and MCI's electronic mail service, MCI Mail.

"We are in discussions with BT" about a stake, Kurnit said in an interview, confirming earlier media reports.

BT, Britain's largest phone company, owns a 20% stake in MCI for which it paid $4.3 billion last September.

Washington-based MCI and News Corp. are also spending $400 million initially on an interactive media alliance, of which the on-line venture announced Wednesday is a part.

The two companies said the new venture will provide a comprehensive guide to the Internet, an on-line news service for consumers and professionals, a variety of games, an on-line area for children and specialized programming.

This will be developed jointly with News Corp. companies such as TV Guide, Fox Broadcasting, Twentieth Century Fox, HarperCollins and newspapers worldwide.

Pricing details for the service have yet to be completed but will reflect the open nature of the forum, Kurnit said.

Income will be generated in four possible ways, he said: through carrying Internet traffic, in which MCI already claims a 40% market share; subscriptions to some of the content; advertising, and merchandising.

Kurnit said the service will be different from all other on-line services because any passing Internet user can look around without paying to get in.

With Microsoft Corp.'s Aug. 24 launch of Windows 95, there will be millions more such users.

Kurnit said he expects the new service to prosper, despite the profusion of on-line companies such as H&R Block Inc.'s CompuServe, Prodigy--owned by Sears, Roebuck & Co. and International Business Machines Corp.--and America Online Inc.

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