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.
One of the factors behind the split was apparently Microsoft’s fears that the website was being seen as too left-wing, and the software giant’s desire to present ‘multiple perspectives’ in its news coverage.
The breakup announced late on 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 per cent 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 on Sunday were automatically redirected to NBCNews.com.
The website will move its headquarters from Microsoft’s corporate campus in Redmond, Washington, 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 also politically slanted.
‘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.