December 23, 2005 11:59 AM PST

Microsoft sheds control of MSNBC

NBC Universal and Microsoft on Friday announced a deal in which the media conglomerate will purchase a controlling stake in the MSNBC cable channel.

Under the agreement, NBC Universal, a subsidiary of General Electric, will receive an 82 percent stake in the network, with the option of claiming the remaining 18 percent after two years. The companies did not disclose the financial terms of the deal.

"Acquiring a controlling interest in MSNBC will allow us to fully integrate the channel into our News operations and our overall cable platform," said NBC News President Steve Capus.

Microsoft initially invested $220 million ten years ago for a 50 percent stake in the Seacaucus, N.J.-based network, which launched in July 1996. But talks of dropping the venture have reportedly been brewing since at least March, as the channel's performance wasn't keeping up with Redmond's expectations.

The two companies will continue to own equal shares of MSNBC.com, which continues to be a leader in the online news space.

It took eight years for MSNBC.com to turn its first profit, and the cable network component has repeatedly lagged behind its competitors in the ratings--although a company statement released on Friday reported that the channel has made "key viewership gains" in recent months.

The site drew 22.3 million unique visitors in November, topping broadcast and cable news sites for the tenth straight month, according to Nielsen/Net Ratings.

NBC has already been making attempts to tap further into its Internet following. Last month, it became the first U.S. news network to air its entire evening news broadcast, free of charge, on the Web.

The deal doesn't mark the first time Microsoft has backed off on a content provider. In 2003 it sold online magazine Slate to the Washington Post Co.

 

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