With Ameritech soon to finalize its purchase of a 30% share in General Electric’s Information Services division, GE’s online computer service is already looking to the deal to help it expand into cable universe and follow the lead of Prodigy, America Online and CompuServe, its chief rivals.
Discussed the deal
John Barber, general manager of GEnie, the online service, discussed the deal and its ramifications at a Jupiter Communications Online Services Conference in New York Tuesday.
According to Barber, Ameritech, the Midwestern telco, will loan $ 473 million to GE, which will be convertible into a 30% ownership of GE Information Services. GEnie, the nation’s fourth-largest computer online service, with over 400,000 subscribers, is just one of 13 businesses under the GE Information Services umbrella.
Consumer reach a goal
GE is looking to move its information services division, which primarily deals with the corporate market, into the consumer arena. The Ameritech deal would aid in this transition, since Ameritech reaches over 10 million private homes with over $ 12 billion in sales yearly.
The initial phase of the deal — the $ 473 million loan — is set to be consummated in early April.
One area high on GE and GEnie’s expansion list is cable. Ameritech is conducting an interactive home-shopping cable test in Birmingham, Mich., with local cable operator Booth Communications.
It also has a residential video service test in the works in Columbus, Ind., with Cardinal Communications.
GEnie is looking to the telco to help it deliver its online service to home computers via cable, much the way Prodigy and America Online are, in various multisystem operator tests nationwide.
The potential snag to the deal is a 1982 judgment that keeps telcos from entering into the long-distance business. Cable ventures violate the judgment, as cable signals are considered long-distance ones. According to Barber, the transfer of 30% ownership in GE Information Services to Ameritech must wait until after the lifting of this modified final judgment decree.
GE Information Services currently yields over $ 600 million in sales each year, including custom business applications and computer services.
The division seeks to continue to leverage GEnie as a consumer service — presently, the most popular GEnie feature is online gaming.