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NBC Universal to take control of MSNBC channel

Posted by iNext - 2005-12-25

NBC Universal said on Friday it bought control of cable channel MSNBC, unraveling a joint venture with Microsoft Corp. as the software giant continues to shift from content production.
Under the agreement, NBC Universal has increased its stake in the cable channel to 82 percent with an option to buy the remaining 18 percent from Microsoft within two years, according to a network executive familiar with the deal. Financial terms were not disclosed.

The MSNBC.com news site will continue to be operated as a joint venture between the two companies.

"Microsoft is really going back to its roots here," said Charles Di Bona, analyst at Sanford C. Bernstein & Co., noting Microsoft's sale last year of online magazine Slate.

"There's a question of where the value is in content," he said. "Microsoft wants to help people deliver and control access to content and create some value in that part of the chain."

NBC News President Steve Capus said in a statement that the controlling stake "will allow us to fully integrate the channel into our news operations and our overall cable platform." NBC Universal is owned by General Electric Co..

The two companies have held serious negotiations for months on unwinding the venture, the network executive said. MSNBC's creation was first announced in 1995 with a $220 million investment by Microsoft for the first five years.

"Both of us decided from a timing perspective that if we were going to do it, it would make sense to do it by year's end," the executive said.

The agreement allows NBC to streamline the technical operations of MSNBC in line with its broadcast news enterprise, but also preserves ties with the MSNBC Web site, which streams online versions of NBC News shows.

There are no immediate plans to change the MSNBC channel's name or programming, the network source said.

The MSNBC channel has lagged far behind cable news rivals Fox News and CNN for years, though NBC noted it was narrowing the gap with a 20 percent audience share during the evening hours. Fox is controlled by News Corp. and CNN is part of Time Warner Inc..

MSNBC.com remains one of the top Internet news sites compared with other broadcast and cable news venues, with an average of 24 million unique viewers per month, according to tracking firm Nielsen.

Microsoft shares traded 7 cents lower at $26.52 midday. General Electric stock rose 6 cents to $35.48.

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