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.
Terms of the deal weren't
revealed. The New York Times cited unnamed people knowledgeable about
the deal who said Microsoft will receive about $300 million for in
exchange for its 50 percent stake in the joint venture.
MSNBC.com has been
rebranded as NBCNews.com. Anyone typing MSNBC.com into a Web browser is
now being 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 Microsoft's MSN
portal and a board member of the former MSNBC joint venture.
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 former 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 finance
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.
