WH Smith and Carlton unite for internet venture

WH Smith and Carlton Communications, the media group, have formed an alliance that will see the two companies cross-promote their internet businesses and share online revenues.

The alliance is a way of the two companies extending the reach of their services and securing access to specialist skills they each lack. It is part of a series joint venture deals being struck by groups with internet interests as they seek to strengthen their online positions in an increasingly competitive market. The deal will see Carlton and WH Smith promote each other's web sites on their online services. WH Smith will also promote Carlton's online business through its chain of 700 high street stores. In addition, the retailer will handle Carlton's e-commerce and fulfilment operations. This means that when a Carlton customer orders a video or DVD online, the order will be sourced, picked and delivered using Smith's existing systems.

In return Carlton will offer its online content, such as film and video reviews and celebrity interviews, to Smith's web sites. Carlton will also be responsible for selling online advertising for both companies. Under the terms of the agreement, Smith's will sell its full range of books CDs, videos and DVDs on Carlton's web site. Carlton will receive half of all Smith's online revenues from orders taken via the Carlton site. Meanwhile Carlton will use its television, cinema screen and internet channels to provide £15m of advertising for the joint venture.

Commenting on the deal, Carlton's chief executive, Michael Green, said: "Carlton brings online content, mass media promotion and interactive potential, while WH Smith has a nationwide retail presence, a strong online e-tail business and distribution and fulfilment expertise."

Carlton's websites receive 6 million page impressions a month. It also has a stake in OnDigital, which has 550,000 subscribers.

WH Smith has been developing a "clicks and mortar" strategy that will enable customers to buy its goods from stores, via the internet or via interactive television. It is also developing a system to link its newsagent customers with its newspaper wholesaling operation.

WH Smith shares closed down 1p at 337p while Carlton shed 13.5p to end at 777p.