AOL, IAC's CitySearch in local advertising deal

NEW YORK, Feb 14 (Reuters) - Time Warner Inc's (TWX.N: Quote, Profile, Research, Stock Buzz) Internet division AOL and IAC/InterActiveCorp's (IACI.O: Quote, Profile, Research, Stock Buzz) Citysearch site will announce on Thursday a partnership to share local content and advertising resources.

Under the deal, Citysearch will provide its local business reviews, videos from merchants and promotions for AOL Web sites such as AOL CityGuide, AOL Local Search and MapQuest.

AOL will in turn open its sites, visited by 57 million unique users per month, to Citysearch's local advertisers.

"It basically allows them (AOL) to take advantage of the economics of local advertising without having to invest in a local sales force as extensively as we do," Jay Herratti, chief executive of Citysearch, told Reuters.

Financial terms were not disclosed, but both companies expect to reap higher revenue from the deal.

Local advertising is viewed as an Internet growth area, as smaller merchants and services grow more comfortable with the technology involved and realize the potential gains.

"I join our sales reps on calls at least once a month and I go and visit with merchants. It's still amazing to me how early we are in that process," Herratti said.

Time Warner said earlier this month it would split the AOL Internet division's dial-up business, which is losing subscribers, from a growing Web site and advertising business. The move is under close scrutiny from Wall Street, which expects it could eventually lead to a sale or spin-off. (Reporting by Michele Gershberg, editing by Leslie Gevirtz)