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Microsoft, NBC Part Ways

Microsoft, NBC Part Ways

Microsoft has given up its stake in MSNBC.com, a move that will likely benefit all parties involved. "Microsoft apparently believes it can now successfully create its own branded content, and NBC no longer requires a partner to be a formidable online presence," noted tech analyst Charles King.

By Peter Suciu E-Commerce Times ECT News Network
07/16/12 11:59 AM PT

The MS part of MSNBC.com has pulled out of the joint venture, it was reported late Sunday. This ends the partnership between Microsoft and NBC News, which is now owned by Comcast.

In 2005, Microsoft sold its stake in the MSNBC cable channel to NBC, and it now will sell its 50 percent interest in the website for an undisclosed amount. The website, which is to be rebranded "NBCNews.com," will move its headquarters from the Microsoft corporate campus in Redmond, Wash., to NBC News headquarters in New York.

The move will also allow Microsoft to expand its own online news services with partners beyond NBC, a strategy already adopted by Yahoo and AOL.

"The dissolution reflects how fundamental changes in online news have led to the partnership becoming increasingly irrelevant to both Microsoft and NBC," said Charles King, principal analyst at Pund-IT.

"When the deal was forged in 1996, it made sense for the companies to work together to mutually benefit from each other's strengths -- or to downplay their individual weaknesses," he told the E-Commerce Times. "But as technology and content creation have become increasingly commoditized, that partner dynamic has changed considerably."

Microsoft and NBC did not respond to our requests to comment for this story.

And Now the News

In corporate breakups, there is usually a winner and a loser, but in this case it is hard to see how this might unfold. In the short term, it could actually help both companies.

"Microsoft apparently believes it can now successfully create its own branded content, and NBC no longer requires a partner to be a formidable online presence," King observed.

It also could allow NBC's news organization to have greater synergy between its broadcast and cable operations -- something that could give it a leg up on CBS and ABC, which don't have as large a cable news presence. As for Fox News, it lacks a nightly newscast on its broadcast network.

"The split solves a branding dilemma for NBC News," said Marcus Messner, a professor in the School of Mass Communications at Virginia Commonwealth University. "While the news channel had been solely run by NBC for a few years, the website was still a joint venture. This created problems for cross-media advertising and overall branding. It will also allow NBC News to develop its own online brand and be more effective in marketing news content across platforms."

Conflict Resolution

The split could also unravel some other corporate entanglements that have become all the more intertwined after Comcast's purchase of NBC.

"By the split, Comcast becomes the only determining player for NBC and the conflicts with Microsoft will be resolved," added Messner. "Microsoft, on the other hand, says farewell to the news business. The joint venture MSNBC was an innovative step in the early stages of the Web in the mid-1990s but had lost its edge and innovation for a while now. The concentration of all platforms under the same ownership makes a lot of sense in this highly diversified media environment."

The downside could be a loss for MSNBC.com.

"Being on the Microsoft campus and having access to their technology has always allowed MSNBC to be fairly cutting-edge on interactivity, knowledge of their audience, and site structure," said Regina McCombs, faculty for multimedia and mobile at the Poynter Institute. "Whether that technology edge can be sustained in their new technology center will be something to watch."

News as Usual

The change in overall ownership of the MSNBC cable channel and MSNBC.com is unlikely to affect what the viewers see, even if there is a shakeup behind the scenes. Therefore, no one should expect MSNBC to move to the center in its on-air commentary for example.

Instead, it could just be more of the aforementioned synergy between the East Coast-based channel and the West Coast-based website.

"I don't expect much editorial change," McCombs emphasized. "My sense, from knowing a number of people who work there, is that Microsoft really did stay out of the journalism side of things. I suspect the biggest change on the content side will be much stronger linking to specific show branding, something they've been moving toward in the past year or so anyway. And separating from the MSNBC cable brand makes it easier for the site to retain a more neutral journalistic stance than some of the cable station's shows have."

The biggest change could be for West Coast staffers who may have to pull up roots.

"Some of the MSNBC news folks based in Redmond will have the tough decision of whether or not to leave the Seattle lifestyle and move to New York to keep their jobs," said McCombs.


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