Comcast Corp. (CMCSA:US)’s NBCUniversal paid about $300 million to buy out Microsoft Corp. (MSFT:US)’s half of their MSNBC.com news-website joint venture, according to a person with knowledge of the deal.
The person declined to be named because the terms weren’t made public when NBCUniversal announced the agreement earlier today. The July 13 transaction ended a 16-year partnership between the two companies.
By taking complete control over the website, NBC can link it more closely with the MSNBC television channel, a property it already bought back from the Microsoft joint venture. The MSNBC site will redirect to NBCNews.com for now, and then get its own makeover in 2013 to help it match the cable channel. Microsoft, meanwhile, will continue to provide news through a new software application.
“We have already built up a profitable business with healthy margins with Microsoft,” NBC News Senior Vice President Vivian Schiller said on a conference call. “There’s a tremendous amount of value wrapped up in the venture. Now instead of owning 50 percent of the business, we’ll own 100 percent. That’s what we paid for.”
The company will bring all of NBC News’s online properties into a new division called NBC News Digital, which will be overseen by Schiller. She declined to comment on the price paid.
Microsoft and NBC started MSNBC in 1996, teaming up to create a 24-hour news channel and companion website. NBC agreed to acquire the news channel in 2005, leaving the Internet portion as a joint venture. Comcast, the largest U.S. cable- television provider, purchased a majority stake in NBC Universal last year.
The latest deal will allow Comcast to better sell advertising against a unified MSNBC TV and MSNBC.com, according to David Joyce, an analyst at Miller Tabak & Co. in New York. He values all of MSNBC at $1.1 billion to $1.4 billion.
Microsoft isn’t leaving the news business, said Bob Visse, general manager of the company’s online services division. Microsoft will rely on its new Bing News app for Windows 8 to provide “a broader perspective on what’s happening in the world,” he said.
“A big part of why we wanted to unwind the joint venture is we had an exclusivity clause where we had to use the MSNBC.com news content only,” Visse said in an interview. “We were hearing from users who wanted us to show multiple perspectives.”
Shares of Philadelphia-based Comcast were little changed in today’s trading, closing at $31.83. Microsoft, based in Redmond, Washington, rose less than 1 percent to $29.44.
The transaction gives NBC News complete control over the MSNBC Digital Network, including MSNBC.com, Today.com, NightlyNews.com, BreakingNews.com and other sites. Microsoft’s MSN Web portal, which competes with Yahoo! Inc. and AOL Inc., will remain a distribution site for NBC News.
While the “MS” in the name relates to Microsoft, NBC won’t rename MSNBC, which has become a valuable brand, said NBC News President Steve Capus. Now NBC wants the website to better reflect what people are seeing on their televisions, Capus said.
“Cable deserves its own dedicated home online, and we’d like there to be brand alignment with the name,” Capus said on the conference call. “This is going to clear up the brand confusion that does exist.”
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