Hughes finalizes break with AOL

Hughes Electronics is cutting even more of its broadband ties in the wake of its failed merger with EchoStar Communications. In a filing with the SEC, Hughes said it is terminating its agreement with AOL-Time Warner to bundle AOL with its satellite broadband service.

The cancellation comes as no surprise as Hughes and AOL began cutting ties last year. In October, AOL said it wouldn’t extend AOL 8.0 to Hughes Network Systems’ satellite broadband service and in January AOL-TW sold its 8.4% stake in the satellite communications company. Hughes also pulled the plug on its DirecTV Broadband DSL service last month.

Hughes said it would incur a $23 million pre-tax charge in its 2002 earnings for eliminating the AOL service, but Hughes said it would wipe as much as $1 billion from its sales, marketing and development spending. Hughes and AOL struck their agreement in June of 1999 when AOL announced it had invested $1.5 billion in Hughes. Since then the AOL satellite services have seen meager results along with most of Hughes other broadband initiatives. Since then AOL has merged with Time Warner, giving it one of the country’s largest cable system and making it direct competitor with Hughes’ DirecTV service.