You will be redirected back to your article in seconds

Hughes’ DirecTV, AOL pact dissolved

Alliance ends due to changes in business climate

NEW YORK — Hughes Electronics’ DirecTV has ended a 4-year-old strategic alliance with America Online, pulling the plug on Internet service AOL Plus and taking a $23 million charge, according to a filing Monday with the Securities and Exchange Commission.

Pact started to unravel by mutual consent in December when AOL said it would stop marketing AOL TV, a stand-alone service DirecTV was helping to launch. Neither AOL TV nor AOL Plus, available via DirecPC Internet access technology, resonated with consumers. DirecTV has about 10,000 AOL Plus subscribers.

A spokesman for Hughes said the business climate has changed radically from the go-go, convergence days in mid-1999 when the deal was signed. Also, at that time, he noted, “AOL did not have any cable investment and was concerned with competing with cable modems.” The drive to compete was tempered by the AOL Time Warner merger, which aligned America Online with the nation’s second largest cable operator.

The dissolution of the pact releases Hughes from a commitment to spend up to $1 billion in sales, marketing and promotion on AOL services.

Broadband focus

Troubled AOL has been paring down to focus its energies on the core challenge of creating a must-have broadband service in the face of heavy competition.

DirecTV has shelved plans to make Internet access widely available — something it had hoped to pursue if it merged with smaller competitor EchoStar. Regulators nixed that deal last fall, and both companies say it’s too expensive to go it alone. DirecTV recently closed down its DSL service. However, it still offers a two-way, high-speed Internet service via satellite to 168,000 subscribers who pay $60 a month in addition to their satellite TV bill.

As a result of the charge, Hughes said cash flow will fall $4 million short of previous estimates to $668 million. Operating losses will be $5 million wider than anticipated at about $400 million.

Hughes, DirecTV and AOL agreed to explore the possibility of new business relationships, according to the SEC filing.

AOL Time Warner, seeking to sell noncore assets and pay down debt, recently sold a stake in Hughes to Bank of America for $800 million.

More TV

  • '4 Blocks' Greenlit For Third Season;

    Turner Greenlights Final Season of '4 Blocks;' Amazon Prime to Stream Season Two

    Turner International has ordered the third and final season of the hit German gangster series “4 Blocks” which world premiered at Berlin Film Festival last year and went on to win multiple awards. The third season will comprise six episodes and will be directed by Özgür Yıldırım, who had co-helmed season two with Oliver Hirschbiegel. [...]

  • Mika Brzezinski

    'Morning Joe's' Mika Brzezinski Apologizes On Air for Using Gay Slur

    “Morning Joe” host Mika Brzezinski apologized on Friday morning for using a gay slur to describe Secretary of State Mike Pompeo. The MSNBC anchor was criticized heavily on social media platforms and by President Donald Trump after she mused during Wednesday’s broadcast that Pompeo wanted to be a “wannabe dictator’s butt boy.” Brzezinski’s comments were [...]

  • Nancy Wilson

    Nancy Wilson, Grammy-Winning Jazz Singer and TV Personality, Dies at 81

    Nancy Wilson, one of the most revered jazz singers of the 20th century, has died, her manager told the Associated Press. She was 81. The singer passed away at her home in Pioneertown, a small California community north of Palm Springs, after a long illness, according to manager Devra Hall. Wilson’s three Grammy awards spanned a [...]

  • Emmys 2019 Rule Change Defines TV

    New Emmys Rules Define Television Movie Length

    The Television Academy announced new rules for the 2019 Emmys Thursday night, including setting the minimum length for qualifying television movies at 75 minutes. The rules changes also included the addition of an Outstanding Music Composition for a Documentary Series or Special (Original Dramatic Underscore) award, and restructuring the choreography categories as follows: Outstanding Choreography [...]


    SAG-AFTRA Commercial Negotiations Set for February

    With no fanfare, SAG-AFTRA and the ad industry have set a mid-February start for negotiations for a successor deal to the union’s master contract, Variety has learned. The current three-year deal — which covers about $1 billion in annual earnings — expires on March 31. SAG-AFTRA and the Joint Policy Committee of the ad industry [...]

  • FILE - In this April 5,

    Eliza Dushku Received $9.5 Million Settlement Over Misconduct on 'Bull' Set

    Eliza Dushku received a $9.5 million settlement from CBS after the actress alleged she was the subject of several inappropriate comments on the set of “Bull,” according to the New York Times. Dushku appeared in the first season of the procedural, initially being brought on for a three-episode arc with plans to make her a [...]

  • Jingle Punks Jingle Player

    Jingle Punks at 10: How the Production Music Platform's Player Works

    Though its primary function is creative, Jingle Punks is built on a foundation of technology and administration. The patented Jingle Player that lets customers search for music using pop culture terms is both intuitive and efficient. Typing in “Reservoir Dogs” or “Starbucks” generates suggestions. Queries are monitored “so if there isn’t an exact match, we’ll suggest [...]

More From Our Brands

Access exclusive content