While CompuServe officials run for cover, the ever-optimistic Jonathan Bulkeley, UK managing director of AOL, answered some questions about the CompuServe/AOL deal, which he is convinced is a win-win situation for all involved.
Q: How long is this complicated deal going to take to complete?
A: Well we'll probably be looking at six months at most, but definitely three months minimum.
Q: Steve Case (CEO of AOL) said in his statement that AOL would now have far more capacity. How are you going to take over the dial up modems and how will AOL cope with CompuServe's massive customer base?
A: CompuServe's network varies according to the country, so the two customer bases will mingle but they won't merge completely. WorldCom is providing something like 100,000 new modems. It means we can get on with content while WorldCom deals with infrastructure.
Q: AOL says it will keep CompuServe intact, but how can that be? You would effectively be competing against yourselves.
A: CompuServe is a brand that some people have an affinity to. They are loyal to the company and can be found in some specific niches, particularly the business/corporate areas. The plan is to exploit CompuServe's strong niches. We have no intention of changing them. You know, CompuServe has some very strong forums and communities on line.
Q: So how are you going to stop competing with a company that offers very similar services to yours, specifically in the UK?
A: I can't get into specifics, as the deal is less than a day old. However, in the UK, the two services will remain separate.
Q: By that you mean CompuServe will remain the business person's choice and AOL, the consumers'?
A: That's speculation.
Q: This deal is going to put you firmly in the number one slot and already analysts are warning AOL about possible anti-trust litigation and customers about increased pricing. Are we likely to see higher prices?
A: If you look back at our history you'll see that we've always kept pricing low. We'll be concentrating hard on advertising revenue. We've only got nine million people on our books. That's not a lot, but we are number one and the number one player gets the largest share of the ad market. Microsoft has a much bigger installed base; how many people run Windows?. I think the regulators will find the deal to their liking.
Q: What difference is this deal going to make to customers and to you as a company?
A: For AOL and CompuServe members today it makes no difference at all.
But in the future, they will see a difference in how the company is. Now we're a media company. We are treading on a much broader market, with all the broadcast guys. It's BT, it's the BBC, Sky. It's much bigger.
Q: If you're concentrating on becoming a media company, how important was it to get out of Network Services?
A: Well we made a lot of money out of ANS which we bought for $35 million (#22 million) in 1995 (it has now been sold for $175 million cash), so we certainly didn't make a mistake there. But it became very clear that we had to focus on our core business which is content and not the infrastructure.
Selling ANS to WorldCom made a lot of sense and means we can get on with producing the very best content.
Q: What's your gut reaction to this deal?
A: I really believe this is good for all the companies involved, particularly for CompuServe. H&R Block was not focused on being a media company at all. AOL is now focused soley on being a media company. Is it good for consumers? Yes, the products will get even better.
While Bulkeley was rubbing his hands with glee, Judy Gibbons, UK director of MSN, had this question for AOL: "How is AOL going to stop all the CompuServe customers fleeing to other services and ISPs?" she asked. Bulkeley replied: "Why would they leave? Nothing is going to change at CompuServe or at AOL.
They will remain quite separate." He added: "Besides, Judy, mine is bigger than yours!"
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