AOL moves to make big-time partnerships

NEW YORK (Reuters) -- Time Warner AOL Internet division will announce Tuesday production deals for five new Web programs as it tries to shore up its entertainment offerings and draw more advertising dollars.

The deals include partnerships with reality television guru Mark Burnett, Dreamworks Animation, "Big Brother" producer Endemol, Madison Road Entertainment, Stone & Co. and Telepictures.

The collaborations will feature games based on the hit animated monster movie "Shrek" and trivia quizzes from Burnett's "Gold Rush." A tie-in with popular talk show "The Ellen DeGeneres Show" will allow viewers to share their personal stories.

"This is really AOL's coming out party as an advertising-supported broadband online service," AOL Chief Executive Randy Falco said in an interview on Monday.

Falco, a former NBC Universal Television Group president who took the reins at AOL last year, was also expected to update Tuesday the company's progress in moving from a subscription Internet access business to one that relies mainly on advertising.

Falco said the business model transition is "going very well," but declined to give details. "More people are coming to the free AOL service, more than offsetting the losses on the dial-up service," said Falco. "It's a growth engine."

Wall Street is eyeing AOL's progress and interpreting an improvement as a major catalyst to Time Warner's stock price. Shares have rallied nearly 50 percent since last summer, but slipped 9 percent since a high in January.

Fourth-quarter ad sales at AOL rose 49 percent to nearly $2 billion. AOL says it reaches about 89 percent of Web users.

Falco said the current period was critical as advertisers decide how much of their budgets to allocate to the Internet. "Marketing budgets are being formed now," he said. "We want to be making sure advertisers, marketers, brand managers [understand] how big of a scale AOL has."

AOL's push comes amid a dramatic change in the advertising landscape as partner and rival Google (down $0.19 to $474.08, Charts) seeks a stronger foothold beyond its dominance of search advertising.

Google agreed last week to buy Web ad supplier DoubleClick Inc. for $3.1 billion, a move analysts said would now allow Google to focus more attention on extending its services to radio, television and print.

Meanwhile, even as AOL works with Google, parent company Time Warner (down $0.21 to $20.93, Charts) called upon U.S. government officials to scrutinize Google's DoubleClick deal.

AOL launched a paid search service this month backed by Google technology as part of a 2005 partnership. Google owns about 5 percent of AOL.

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