America Online, the world's largest online service, said Monday it has agreed to buy MovieFone, the telephone movie schedule service, for about US$388 million in stock.
Under the agreement, AOL (AOL) will fold the new AOL MovieFone into its Digital Cities sites. Considering that people use MovieFone 100 million times a year and that entertainment listings are one of the biggest draw of advertising dollars on the Net, the acquisition could significantly boost AOL's clout in Hollywood.
MovieFone shareholders would receive AOL stock worth $29.25 a share, according to AOL. The exact ratio hasn't been worked out, but it will range between 0.1670 and 0.2259 of an AOL share. AOL said it expected the transaction to be accounted for as a pooling of interests. MovieFone directors have already approved the deal and are asking shareholders to go along.
The deal will also bolster AOL's position against TicketMaster Online CitySearch (TMCS). Last summer, CitySearch, a collection of local city guides, merged with TicketMaster Online, hoping to form a natural coupling of entertainment guides and ticket sales.
AOL hopes to get the same benefit from MovieFone. MovieFone carries movie listings for 17,000 screens in 42 markets, including New York, Los Angeles, and Chicago. The company sells tickets for films appearing on 3,000 screens, or 70 percent of the national movie audience.
AOL shares ended $4.50 lower at $171.19 in New York Stock Exchange trading, while MovieFone was up $1.50 at $26.50 on the Nasdaq.
Company officials couldn't immediately be reached for more comment.
Reuters contributed to this report.
