NEW YORK – NBC is acquiring a majority stake in MSNBC from Microsoft Corp., giving NBC greater control over the struggling all-news cable channel and further scaling back the software giant’s media ambitions.
NBC, a unit of General Electric Co., will wind up with an 82 percent stake in the cable network, though NBC and Microsoft will continue to share ownership of the channel’s Web site, MSNBC.com. After two years, NBC will have the option of buying the remaining 18 percent stake of the network.
The companies declined to disclose financial terms of the deal, which had been expected for months. At the time the venture was announced in 1995, Microsoft said it would invest $220 million for a 50 percent stake in the network.
The joint venture was launched with much fanfare amid hopes that it would build a cross-media partnership delivering the news over both TV and the Internet, which was in its infancy at the time.
But while MSNBC.com has become one of the highest-ranked news sites on the Web, the cable TV channel was later eclipsed by News Corp.’s Fox News Channel, which also went live in 1996.
Today MSNBC still ranks a distant third behind Fox News and Time Warner Inc.’s CNN in the Nielsen ratings, with just 257,000 viewers in November, versus 449,000 for CNN and 889,000 for Fox News.
NBC’s head of news, Steve Capus, said in a statement that he expected the deal to allow NBC to make a fuller integration of MSNBC into its news operations.
NBC has always had editorial control of MSNBC, which was the proving ground for NBC’s new evening anchor Brian Williams. But with majority ownership of the network, NBC will now be able to consolidate MSNBC’s back-office functions with its other cable networks including CNBC, a business news channel.
For Microsoft, the move marks the latest pullback from the media business following its sale of the online opinion journal, Slate, to The Washington Post Co. a year ago.
Technology analyst Rob Enderle said he thinks Microsoft originally invested in MSNBC because the company was predicting a closer convergence of online and television media, which never materialized.
Enderle said Microsoft also may have hoped the partnership would make it easier to get content for some of its other ventures, such as an entertainment-focused Windows operating system.
“Their investments really didn’t bear fruit with regard to access,” Enderle said, noting that rival Apple Computer Inc. earlier this year was able to score television content deals for its video iPod without making such hefty investments.
But Enderle said he expects Microsoft to continue to be interested in MSNBC.com because the online news arm – while still somewhat disappointing – is more of a technology investment than a media investment.
Shares of GE closed flat at $35.42 Friday on the New York Stock Exchange. Microsoft shares rose 5 cents to close at $26.64 on the Nasdaq Stock Market.
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