MSNBC Becomes NBCNews.com As Microsoft And NBC Split

The long impending and expected divorce between Microsoft and NBC has come through and both have officially ended a relationship that between them sired one of the web’s biggest news portals: MSNBC with an estimated 55.7 million visitors this year. This acquisition brings to an end a 16-year, 50-50 joint venture of Microsoft and NBC.

The alimony has been huge, and NBC and its corporate owner Comcast, to have sole custody of the news site reportedly paid $300 million. The exact figures have not been disclosed by either party. They have decided to rename it NBCNews.com.

“Today we’re taking on a new name — NBCNews.com. While our name is changing, our commitment is not,” Jennifer Sizemore, editor-in-chief of NBCNews.com, wrote in a letter posted on its website.

The alliance was destined to fall, for it was an awkward marriage for both had different aptitudes and competencies.  Microsoft is basically not a content company, while NBC News didn’t control its own web presence.

Moreover, as the Internet began to play a major role in the success and future of their respective businesses, each desired to be in greater command of their digital future. The natural limitations imposed by sharing mutual interests in a joint venture sometimes shackled both Microsoft and NBC; hence, the separation was an understandable outcome.

“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.

Discussions to go their separate ways had commenced eight years ago, when NBC bought a controlling stake in the MSNBC cable news network, which was also a joint venture between them which they commenced in 1996.

Even then NBC wanted to acquire all of MSNBC.com, but an appropriate price could not be negotiated as NBC was unwilling to pay the price Microsoft wanted to exit. Moreover, MSNBC also depended considerably in traffic from Microsoft’s web portal, MSN. Both mutually decided that the time was not ripe for severance.

Having been together for so long, the separation cannot just take place overnight, with the partners agreeing on a divorce. Analysts believe that the complex joint venture will take at least two years to unwind.

The network, revealing condition and terms of the partition said that NBCNews.com will carry on providing news to Microsoft’s MSN web portal, while Microsoft will continue to sell NBCNews.com ad inventory. Microsoft issued a statement saying that MSN will remain an “important distribution partner” for NBCNews.com.

However, readers who logged into MSNBC.com late Sunday were automatically redirected to NBCNews.com. The website will locate to its new headquarters in New York from Microsoft’s corporate campus in Redmond, Wash.

Microsoft that it is hopeful of launching its own news service this fall. Not elaborating too much on it, Bob Visse said that he intends to create a new staff team of around 100 people, around the same number as those who created original content for the MSNBC.com.

By intending to hire its own staff, Microsoft is following in the footsteps of the two other major Internet companies, Yahoo Inc. and AOL Inc.

“There is no question that we are going to have more flexibility to make our own decisions,” said Vivian Schiller, NBC News’ chief digital officer. “This is really an amicable breakup. We think competition will make us better.”

Schiller’s statement comes in the wake of the agreement that, even though they are going separate ways, Microsoft will continue to highlight the top stories from its former partner for the next two years and NBC believes that it will now be able to form new partnership, now that its obligations to Microsoft are over.

The site will be folded into NBC Digital and run by former National Public Radio chief executive Vivian Schiller, who joined as NBC News digital chief last year. Current MSNBC President Charlie Tillinghast will remain at the helm of former MSNBC digital properties, among them, Today.com, NightlyNews.com and EveryBlock.com and report to Ms. Schiller. NBC News President Steve Capus will lead the digital news operation.

Irrespective of all other claims of mutual benefit in the parting, what both stand to gain the most is in advertising revenue. Advertising revenue is the life support for news organizations and, in fact, all media. The ever-upward market of commercial goods and services coupled with greater than ever globalization will open up hitherto shared markets to both NBC and MSN.

“It’s undeniable how big a part of all of our businesses the digital properties are going to be. We think we have a much better opportunity to shape them, and frankly grow the news division over all, if we have direct control over all of it.”