After a tumultuous 16-year marriage, it's finally splitsville for Microsoft (Nasdaq: MSFT) and NBC News (Nasdaq: CMCSA).
The world's largest software maker announced late Sunday that it is pulling out MSNBC.com, its joint venture with NBC News. The move will allow the company to build its own online news service at a time when more and more consumers are finding their news online.
Comcast, which owns NBC News, has purchased Microsoft's 50 percent stake in the MSNBC website for an undisclosed amount. The website will relocate from Microsoft's Redmond, Wash., corporate campus to NBC News's New York offices, although it will retain a number of staffers in the Seattle area.
The high-profile media divorce follows several years of dissatisfaction from both companies, as each wanted more control over how the online news service was run. Microsoft had apparently grown particularly discouraged by a deal that required it to feature only MSNBC.com content on its sites.
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, Bob Visse, general manager of MSN.com, told the Associated Press.
The split between Microsoft and NBC News marks the end of one of the most ambitious joint ventures between old and new media. MSNBC.com was launched in 1996 along with its companion cable-news station, which the companies hoped would compete with CNN. However, both networks encountered unexpected ratings challenges from Fox News (Nasdaq: NWS), which was also launched in 1996. Microsoft sold its 50 percent stake in the cable network to NBCUniversal in 2005, and the relationship between Microsoft and NBC News had been rocky ever since. The MSNBC cable network will not change its name for now, although some analysts are saying that dissolving its relationship with Microsoft will give NBC News the opportunity to ramp up the liberal spin in its coverage.
The two companies' strong desire to gain more control over their online news businesses is well founded. Since the explosion of online video in the mid-2000s, more and more consumers have turned to the Internet as their primary source of news. A new study -- released on Monday by the Pew Research Center's Project for Excellence in Journalism -- found that YouTube (Nasdaq: GOOG) is fast emerging as a major platform for real-time news.
Researchers examined 15 months of content on the video-sharing site and discovered that more than half of the most-watched videos come from professional news organizations, although viewership for TV news still easily outpaces that of news consumption on YouTube. Nevertheless, with the video behemoth playing host to more than 200,000 new videos every day, other sources of online news clearly have some catching up to do.
MSNBC.com attracts about 49.9 million monthly visitors, according to the online tracking service comScore. With the split from NBC News final, Microsoft is planning to launch its own news service this fall. According to Visse, the newsroom staff of the new site will be roughly 100 people, about the same size as the staff that created original content for the MSNBC.com.