Microsoft, Nbc Form Partnership
Despite Bill Gates’ pledges to the contrary, Microsoft is getting into the news business in a big way, putting up $220 million to own one-half of a 24-hour news network to be run by NBC.
The software company won’t gather news and write stories - that will be left to NBC. But on top of its initial investment, Microsoft will spend more than $200 million over the next five years - matching NBC’s investment to operate the service for television and computer on-line use.
The network, called MSNBC, will compete head-to-head with CNN (Cable News Network) on television but will be supplemented by a computerized news service to be provided over the Internet, the global-computer network. That service, which is where Microsoft will play its largest role, will deliver video, audio and written news, and will let computer users take part in chat sessions and other interactive features.
“This is the very beginning of the interactive world,” Gates said Thursday through a satellite broadcast from Hong Kong, where he is traveling on business. “We’ll be able to be a leader and make the news far more attractive than it’s been.”
The move follows aborted attempts by Gates to become a news partner. Earlier this year, he negotiated with Ted Turner to form an alliance with Turner Broadcasting System. Talks fell through, though, after TBS was bought by Time Warner Inc.
The NBC-Microsoft network will be launched late next year as a replacement for NBC’s 18-month-old all-talk network, America’s Talking. That will give it a startup audience of about 20 million. The operation will be run primarily from an NBC facility in Charlotte, N.C.
The deal expands on an existing partnership between the broadcaster and software conglomerate, in which NBC has provided a more limited news service over The Microsoft Network.
Microsoft has edged closer and closer to the world of publishing since launching its own on-line service, The Microsoft Network, in August. That service provides magazine stories, news reports and other content, although until now that content has been created by companies that Microsoft has no interest in.
Asked whether Microsoft would eventually become a “content” company - essentially a publisher - Gates has said no.
It was unclear Thursday whether he considers the NBC step to be a reversal, or whether he thinks spending more than $420 million on a news service does not equate to becoming a content company. The question did not come up at the news conference, which was run mainly by NBC.
Microsoft’s relationship with NBC already has raised some eyebrows. This summer, NBC anchor Tom Brokaw conducted a one-hour interview with Gates when most news organizations were denied access.
NBC and Microsoft executives announced their plan at a New York news conference Thursday.
After a brief statement by NBC President Bob Wright, the conference switched via satellite to Brokaw, who is on assignment in Germany. Wright introduced Brokaw and referred to Gates as Brokaw’s “pal.” Then Brokaw posed a few soft questions to Gates, including one in which Brokaw alluded to “our challenge” of giving shape, form and definition “to all that news and information and communication that’s out there in that vast cyberspace.”
Wright stressed Thursday that NBC would retain independence in covering the news - even negative news about Microsoft, a company that has been investigated heavily in recent months by the U.S. Justice Department’s antitrust division.
“All of the news gathering will be done by NBC News. Microsoft will have no role in the editorial,” Wright said.
The Microsoft employees who now cull and edit wire stories for The Microsoft Network will instead work for the new venture, Gates said. It was not clear whether they would have to relocate.
Negotiations between Microsoft and NBC began months ago but extended into the evening Wednesday. Gates said Thursday he doesn’t expect the venture to make a profit for several years.