ZURICH – Terra Lycos, the new Spanish-US Internet combine, has taken a 25 percent stake in Bertelsmann-Online, the German media giant’s entertainment shop, to help BOL expand into Latin America.
The stake is part of an agreement between the two companies calling for Bertelsmann to spend $1 billion over the next five years with Tyerra Lycos to promote and distribute Bertelsmann content from books and records to magazines and videos.
German media reported that Terra Lycos participation in BOL was the real reason the e-merchant’s planned IPO on Frankfurt’s new market was postponed last month. BOL blamed a sagging high tech market for the delay.
“Current capital markets don’t correspond to the value that BOL would bring,” Beat Werder, BOL’s PR manager at the division’s headquarters in Switzerland, said a week before the new deal was announced.
“The market has problems and is unsure of where it is going and that’s why we decided to wait. We haven’t set a new date but we’ll keep watching the market and wait for it to tell us when it is ready.”
But in fact BOL does not lack for cash to finance expansion into new markets and addition of new products to the mix it is planning to put on Web display.
Sale of Bertelsmann’s stake in AOL Europe is expected to raise $7 billion to $8.5 billion in a deal that allows Bertelsmann to remain a “preferred premier partner” on all AOL outlets.
Terra Networks, the Internet subsidiary of Spain’s Telefonica, bought Lycos last month for stock worth $12.5 billion. Bertelsmann has a joint venture with Lycos in Europe and will join the company in three years when a non-compete with AOL expires.
The deal is mutually beneficial, analysts said. Bertelsmann gets to fill the Spanish-Portuguese niche in its distribution channel and Terra Lycos wins access to the German firm’s broad array of content.
As for BOL, it will offer videos starting this summer and add software, computer games and whatever new technologies come along at a later date, Werder said.
BOL has moved rapidly since it went online in Germany and France in February of last year. Last month the European Commission approved its 50 percent stake in the Nordic Internet bookshop Bokus.com.
The company also is active in Holland, Spain, Switzerland, and the UK. An Italian launch is imminent. (In the US Bertelsmann has a stake in barnesandnoble.com)
It opened three Web sites in Asia in March to cover Malaysia, Hong Kong and Singapore, offering English-language books. China and Japan are due later this year with Korea coming in 2001.
Bertelsmann has a book club in Shanghai and Werder expects that presence to ease BOL’s launch problems with Chinese authorities who are still leery of foreign media ownership.
BOL has had a small office in Japan since last year but will team up with Kadokawsa Shoten Publishing, a Japanese firm, in an e-tailing venture to sell books in Japanese.
In Latin America BOL will focus on Mexico City, Brazil and Argentina, and expects the Mexico City operation to radiate across Central America.
Werder expects rapid online growth worldwide. He noted that online book sales in 2003 will total, according to one study, 2.3 billion euros (about $2.1 billion), some 6 percent of Europe’s total book sales.