Microsoft and Compaq Join Time Warner Cable and MediaOne
in HighSpeed Online Venture — Investments by Microsoft, Compaq signal continued growth in high-speed data delivery through cable modem technology
June 15, 1998 – Microsoft Corp.will bring its strategic expertise and software technology leadership and Compaq will bring its strengths in consumer PC market leadership and retail market distribution to the high-speed, cable-modem venture of Time Warner, Advance/Newhouse and MediaOne, the companies said today. The service will be marketed under the Road Runner brand.
The venture, which officially closed today and was announced late last year, is the largest high-speed online service in the U.S., with more than 90,000 customers and access to 27 million cable homes. As part of a major effort to accelerate the delivery of broadband services over cable modems to consumers and small businesses, Microsoft will build upon its existing relationship with Road Runner by bringing to the new venture its expertise in Internet, client, server and application software. As a major next step in its newly announced Internet PC strategy, Compaq will deliver cable-ready PCs to the market. As part of the agreement, Microsoft and Compaq each made $212.5-million investments in preferred equity in Road Runner, which represents a 10 percent stake for each company in the business on a fully diluted basis.
The venture provides a major enhancement to the Internet, transforming the user experience and creating new avenues for the networked society. It combines the best in infrastructure and content to ensure a great online experience for consumers and businesses. The Road Runner content combines a rich offering of easily navigated content and applications, taking full advantage of the unique capabilities of high-speed and constant connectivity. The venture’s infrastructure provides for a fully managed, high-performance, private backbone network – interconnected to other networks – ensuring that users get unparalleled access to this service and the Internet.
Gerald M. Levin, chairman and CEO of Time Warner Inc., said,
“Today’s investments by Microsoft and Compaq validate the cable architecture as a premier Internet distribution medium, which will benefit consumers nationwide. This combination of world-class companies will enable us to develop a powerful, branded package of content that will become the high-speed online service of choice for our customers. Microsoft’s and Compaq’s expertise complements perfectly the strengths of Time Warner and MediaOne.”
Chuck Lillis, chairman and CEO of MediaOne Group, said,
“With this combination of industry leaders, the venture will be well-positioned to rapidly deploy a wide range of high-value content and services to our customers. As network-based services become ever more integral to our lives, providing a network that will allow us to ensure the performance, connectivity and interoperability to any network in the world will be critical. This venture provides the ideal platform to build both the online service of choice and the network.”
Bill Gates, chairman and CEO of Microsoft, said,
“Microsoft is committed to helping enable high-speed data access and interactive content through the cable infrastructure. This venture brings the right combination of technology and Internet access to make high-speed Internet connectivity a reality for consumers.”
“Compaq is committed to accelerating the deployment of high-speed Internet access,”
said Eckhard Pfeiffer, Compaq president and CEO.
“This new venture enables us to take advantage of the converging technologies of the Internet, computers, and broadband services to deliver vastly improved data access and services to consumers.”
Donald Newhouse, president of Advance Publications and Newhouse Broadcasting, said,
“As a partner in the Time Warner Entertainment-Advance/Newhouse Partnership, Advance/Newhouse sees Road Runner as a way to combine the right content and services with the fastest and most reliable backbone to offer the greatest value to our customers.”
Ownership of the venture on a fully diluted basis will break down as follows: Microsoft and Compaq each will have 10 percent; Time Warner Inc. will have about 9 percent; Time Warner Entertainment (through its Time Warner Cable division), in which Time Warner Inc. and MediaOne Group are partners, will have about 20 percent; MediaOne Group will have about 25 percent; and TWE-Advance/Newhouse will have about 26 percent.
Advance/Newhouse is a partnership of Advance Communications Corp., a subsidiary of Advance Publications, Inc., and Newhouse Broadcasting Corp. Advance Publications’ other interests include Conde Nast Magazines; The New Yorker Magazine; PARADE Magazine; American City Business Journals; and daily newspapers serving 22 cities, including the Star Ledger (Newark, N.J.),Cleveland Plain Dealer, Times Picayune (New Orleans), and Portland Oregonian.
Founded in 1982, Compaq Computer Corporation (NYSE: CPQ) is a Fortune Global 200 company. Compaq is the second largest computer company in the world and the largest global supplier of personal computers. Compaq develops and markets hardware, software, solutions and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, networking products, commercial desktop and portable products, and consumer PCs. Information about Compaq and its products can be found at (http://www.compaq.com) .
MediaOne Group (NYSE: UMG) is one of the world’s largest broadband communications companies, bringing the power of broadband and the Internet to more than seven million customers in the United States, Europe and Asia. The company also has interests in some of the fastest-growing wireless communications businesses outside the U.S., serving nearly three million customers. For 1997, the businesses now part of MediaOne Group produced $6.6 billion in proportionate revenue.
Founded in 1975, Microsoft (NASDAQ:
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.
Time Warner Inc. (NYSE: TWX), the world’s leading media company, consists of four businesses: cable networks, publishing, entertainment, and cable.
The Road Runner character is a trademark and copyright of Warner Bros., a division of Time Warner Entertainment Company, L.P.