NBC, Microsoft Make News With Joint Venture Cable Web

In a presentation chock-a-block with high-tech hype, pomp and circumstance, NBC and Microsoft announced a partnership that includes 50/50 ownership of a 24-hour cable news channel and several related online services.

Dubbed MSNBC Cable, the joint venture is expected to launch “within six months” and is a makeover of NBC’s fledgling America’s Talking network. For its half-ownership in MSNBC, Microsoft has agreed to pay $220 million during the next five years. To fund the venture, both parties will invest another $200 million during the same period.

Online tie-in

The new service will be integrated with complementary online services, including a version of MSNBC on the Microsoft Network and a version available on the Internet. MSNBC will get distribution internationally over NBC’s pan- European SuperChannel, Canal de Noticias in Latin America, CNBC Asia and the soon-to-be launched NBC Asia. NBC affiliates will be able to participate down the road.

Talking subscribers

NBC brimmed with confidence that MSNBC, boosted by America’s Talking’s 20 million subscribers, would achieve hit status on launch. But the new channel has its work cut out for it before it can claim victory in the news wars.

NBC-parent General Electric’s chairman Jack Welch and NBC chairman Bob Wright held court in the network’s 30 Rock studio, flanked by a triptych of giant-screen TVs, including one beaming Microsoft chairman Bill Gates live from Hong Kong.

The trio touted their alliance as the beginning of a partnership that would revolutionize television. “Today, NBC and Microsoft have come together to create news for the next millennium,” Wright said. “No network has ever offered news coverage of such breadth and depth before.”

“One of the key things is that both of the companies are saying, ‘We believe in the world of interactivity, but we’re bringing this world into broadcast,’ ” Gates said onscreen. “We’ll be working with NBC to create innovative interactive news content and an integrated media experience.”

Reshaping commerce

“This is a big deal for GE because commerce is never going to be the same in the next decade,” Welch said. While Welch said this deal was “never about Microsoft taking a 49% interest in NBC,” he did see the computer giant’s purchase of 50% of a key NBC asset as the basis for a relationship that has the potential to blossom into something much bigger as the agendas of both companies converge.

Indeed, to Welch the pact between NBC and Microsoft is the perfect vehicle to forge an alliance between GE, the biggest corporation in the world, and Microsoft, the company that is the reigning power in the digital revolution.

“Business will be done differently, distribution will be done differently,” Welch says. “Who better to hang around with than the company that has done more to change the world than any other?”

NBC will have editorial control over MSNBC. Programming will be coordinated by a team under NBC News prez Andrew Lack, including NBC News VPs Bill Wheatley and David Corvo, as well as Bob Hoerner, who heads the Charlotte, N.C.-based affil NBC News Channel.

NBC brass were vague about programming for MSNBC, saying only that it was unlikely they would rerun NBC News programming, and that they will try to make it different in tone and substance than CNN.

Experimental phase

“This is something new,” Lack said. “Because it’s niche programming, we can experiment. This is our opportunity to break new ground.”

Meanwhile, it was unclear whether CNBC prez Roger Ailes, who had America’s Talking in his domain, would stay on, despite support from NBC brass. Ailes was absent from the press conference and issued a statement praising the staff of America’s Talking and giving a tepid nod to MSNBC. “I understand the corporate goals of NBC as we move into the 21st century,” Ailes says. “And I will lend my support to this transition.”

Adding heat

The MSNBC announcement heats up the coming cable news war that finds not only this venture, but a 1997 launch of a channel by ABC posing a challenge to CNN’s dominance.

“There’s nothing about this new service that we don’t already have and more,” CNN spokesman Steve Haworth said. “We’re on the Internet, we’ve had a desktop service and we have far greater distribution for CNN and Headline News. We thrived on the competition from ABC, NBC and CBS, and we will continue to do so.”

A big question mark for MSNBC is what Tele-Communications Inc. and Time Warner will do. Both have a large stake in CNN parent Turner Broadcasting and combined account for more than 25% of America’s Talking’s subcribers.