As widely anticipated, America Online Inc has acquired defunct internet-over TV company NetChannel Inc on undisclosed terms. Speculation last week had AOL paying about $20m, $5m of which had already been lent to NetChannel last November. NetChannel’s service ceased operations May 3 after failing to secure funding and gaining only 10,000 subscribers since its roll-out seven months earlier. AOL is acquiring the engineering and programming expertise, rather than the whole company and it is not clear yet how many people are moving over. AOL also declined to speculate on the destiny of NetChannel’s management team, which was also unavailable for comment. As for the future, AOL said things are at a very early stage right now, and the company is exploring its options as far as a TV-based version of AOL goes. NetChannel found it could not compete with Microsoft Corp’s WebTV Networks Inc unit, which got a considerable head-start on NetChannel, both in terms of subscribers and technology – it now has more than 300,000 subscribers. But an AOL-Microsoft head-to-head would promise a more evenly-matched fight.
