UltimateTV shakes hands with News Corp.

Microsoft's UltimateTV division has signed a consulting agreement with media giant News Corp.'s Sky Global Networks division.

Microsoft confirmed Thursday that the two divisions will develop and test new products and services for interactive television. As first reported by The Wall Street Journal, Microsoft announced the deal to UltimateTV employees earlier this week through an internal e-mail.

The deal is nonexclusive for both parties, UltimateTV spokesman Tim McDowd said. Financial terms of the deal were not disclosed.

UltimateTV is the successor to Microsoft's original interactive TV venture, WebTV. The second-generation service works with DirecTV's satellite receivers and service in the United States to handle e-mail, Web surfing and digital video recording. Sky Global Networks is News Corp.'s satellite broadcast service and targets homes outside the United States.

"We're really in the initial stages of the agreement," McDowd said. He added that the deal is part of UltimateTV's ongoing effort to increase its subscribers and expand worldwide.

McDowd would not disclose the number of DirecTV subscribers with UltimateTV service. "We only make announcements at significant milestones," he said.

The service has been ready since January, but set-top boxes for the service did not become available until late March.

The new agreement comes amid negotiations between News Corp. and General Motors. News Corp. wants to buy GM's Hughes Electronics, which includes the DirecTV unit. News Corp. is receiving financial support from Microsoft for the purchase of Hughes.