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Microsoft & NBC Officially Break Up

via Brian Stelter, The New York Times

On Sunday night, MSNBC.com did something that successful Web sites almost never do: it renamed itself.

The site became NBCNews.com, signifying the end of a relationship between NBC and Microsoft that dates back to the earliest days of the commercial Web. Early next year, MSNBC.com will be reborn as a stand-alone site for the cable channel MSNBC, ending the brand confusion that has plagued the site in the past.

With the changes, “we will fully own our digital businesses,” said Steve Capus, the president of NBC News. That’s because the company that controls NBC, Comcast, is acquiring Microsoft’s 50 percent stake in the joint venture that brought MSNBC.com to life in the mid-1990s — in effect, a big investment by Comcast in the news division’s future.

Microsoft is receiving roughly $300 million for the stake, according to people with knowledge of the transaction who insisted on anonymity because the total price was not being made public. A portion of the total price comes from the joint venture’s past profits.

The moves come at a time when television news operations like NBC News, the home of “Today” and “NBC Nightly News,” are increasingly looking online for advertising dollars and new audiences. NBC executives say they will bring the television and NBCNews.com staffs closer; improve the digital distribution of their TV programs; and make more apps and Web sites optimized for mobile devices, a major area of growth.

“It’s undeniable how big a part of all of our businesses the digital properties are going to be,” Mr. Capus said in an interview at his office at Rockefeller Center in Manhattan. “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.”

In describing MSNBC.com, Mr. Capus said, “What we have right now is fine.” He stretched out the last word. “But I hate the word ‘fine.’ We want something more than fine.”

Like a couple who stays together for far too long — to their friends’ discomfort — the breakup between NBC and Microsoft has been a long time coming. The partnership was pioneering at first, with a best-in-its-class Web site owing to Microsoft’s technologists in Washington State and a companion cable news channel run by NBC’s news-gathering teams in New York. But drastic changes in the media business, differing priorities inside the companies and the physical distance between them brought them apart.

Microsoft’s stake in the cable channel was dissolved in 2005. But NBC came to feel handcuffed by the Web arrangement; an increasing number of advertisers wanted to buy ads both on its TV newscasts and its Web sites, a strategy called cross-media sales, but it could not respond effectively because Microsoft ran the ad sales part of the business.

The joint venture set up a special team for such sales, and it has been particularly successful with the “Today” show and Today.com.

“Our success in cross-media sales was one of the driving forces in wanting to get a deal done,” said John Kelly, the executive vice president for ad sales for NBC News.

Another driver was MSNBC, the cable channel, which started to take on a politically progressive persona several years ago. As the image of MSNBC changed, the head of MSNBC.com, Charlie Tillinghast, floated a name change.

“Both strategies are fine, but naming them the same thing is brand insanity,” he said to his staff in early 2010.

NBC and Microsoft could not agree on proposed changes that year. But conversations resumed after Comcast acquired a majority stake in NBCUniversal in early 2011. Divorce talks between Comcast and Microsoft started in earnest last winter and were reported by a number of media outlets in the spring. The deal was signed last Friday.

For now, MSNBC.com will automatically redirect browsers to NBCNews.com, and the site will initially look the same, save for a new logo. But it will be owned and operated by NBC, which will make changes more nimbly in the future. Production of the site will shift to New York, though some engineers and other technical employees will stay in Washington State, where NBC will set up what it calls the NBC News Innovation Center.

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