Microsoft, NBC dissolve
MSNBC.com joint venture
Jul 15, 10:27 PM EDT
By MICHAEL LIEDTKE AP
Technology Writer
SAN FRANCISCO (AP) --
Microsoft is pulling out of the joint venture that owned MSNBC.com, freeing the
world's largest software maker to build its own online news service.
The breakup announced late
Sunday dissolves the final shreds of a 16-year marriage between Microsoft Corp.
and NBC News, which is now owned by Comcast Corp. The relationship began to
unwind in 2005 when Microsoft sold its stake in MSNBC's cable TV channel to
NBC.
NBC is buying Microsoft's
50 percent interest in the MSNBC website for an undisclosed amount. MSNBC.com
will be rebranded as NBCNews.com, and readers who logged into MSNBC.com late
Sunday were automatically redirected to NBCNews.com.
The website will move its
headquarters from Microsoft's corporate campus in Redmond, Wash., to NBC News'
longtime home in New York.
The online divorce stemmed
from the two partners' desire to gain greater control over their digital
destinies as the Internet becomes an increasingly important part of their
businesses.
The inherent constraints
of being locked into a joint venture sometimes handcuffed Microsoft and NBC.
Microsoft, in particular,
had grown frustrated by contract terms requiring it to exclusively feature
MSNBC.com content on its own websites. That exasperation was exacerbated by the
MSNBC cable channel's strategy to counter Fox News Channel's appeal to
conservative viewers by tailoring its programming for an audience with a
liberal viewpoint.
The strategy fed a
perception that material from MSNBC's website was politically slanted, too.
"Being limited to
MSNBC.com content was problematic to us because we couldn't have the multiple
news sources and the multiple perspectives that our users were telling us that
they wanted," said Bob Visse, general manager of MSN.com.
Now that it has shed those
shackles, Microsoft is preparing to launch its own news service this fall.
Although he declined to provide many details about the operation, Visse said
the news staff will be about the same size as the roughly 100 people who
created original content for the MSNBC.com.
By hiring its own news
staff to feed material to its websites, Microsoft is embracing the same
strategy as the owners of two other major Internet companies, Yahoo Inc. and
AOL Inc.
Microsoft has leaned on
its lucrative franchise selling personal computer software to pay for massive
Internet investments that have rarely paid off, much to the frustration of its
shareholders. The software maker initially invested $220 million in the MSNBC
joint venture. It's unclear if Microsoft ended up making any money on the
alliance. As a whole, the company's online operations, which include the Bing
search engine and MSN portal, have lost more than $10 billion in the past seven
years.
Even as it sets out to
compete against NBC News, Microsoft will continue to highlight the top stories
from its former partner for the next two years under terms of the split.
NBC News, in turn,
believes it will be able to attract more traffic to its stable of websites by
forging other partnerships that were off limits when it was tied to Microsoft.
"There is no question
that we are going to have more flexibility to make our own decisions,"
said Vivian Schiller, NBC News' chief digital officer. "This is really an
amicable breakup. We think competition will make us better."
MSNBC.com and its
affiliated sites ranked as the Internet's fourth most popular site for general
news in the U.S., with nearly 50 million visitors in June, up 5 percent from
last year, according to the research firm comScore Inc.
Yahoo's recently formed
alliance with ABC News topped the charts with 81 million visitors, followed by
AOL/Huffington Post, and CNN.
As part of its online
restructuring, NBC News plans to create a new online destination for the MSNBC
cable channel's personalities next year.
Although it will be based
in New York, NBCNews.com will retain a significant staff in the Seattle area,
according to Schiller. About 170 of MSNBC.com's 300 employees worked in the
Seattle area.
Microsoft is letting
NBCNews.com remain in its Redmond office while it looks for a new location in
the area.
THIS IS A BREAKING NEWS
UPDATE. Check back soon for further information. AP's earlier story is below.
Microsoft is pulling out
of the joint venture that owned MSNBC.com so it can build its own online news service.
The breakup announced late
Sunday dissolves the final shred of a 16-year marriage between Microsoft Corp.
and NBC News, which is now owned by Comcast Corp. The relationship began to
unwind in 2005 when Microsoft sold its stake in MSNBC's cable TV channel to
NBC.
Now NBC is buying
Microsoft's 50 percent interest in the MSNBC website for an undisclosed amount.
The deal will result in MSNBC.com being rebranded as NBCNews.com.
The online divorce stems
from the two partners' desire to gain greater control over their digital
destinies as the Internet becomes an increasingly important part of their
businesses.
© 2012 The Associated
Press. All rights reserved.
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