Microsoft Abandons MSNBC Cable Channel - 27 Dec 2005

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==== In the News ====

Microsoft Abandons MSNBC Cable Channel
by Paul Thurrott, [email protected]

As the year waned in the days before the Christmas holiday, Microsoft officially severed its MSNBC partnership with NBC, but the two companies will retain joint control of the MSNBC.com Web site. What's interesting about this story isn't that it happened--the Microsoft/NBC partnership soured long ago--but the way it happened.

Last Friday, both the Microsoft and NBC offices were closed for the holiday. The announcement that the MSNBC partnership was dissolving came at 8:00 A.M. on that day, when executives from both companies were unavailable for comment. On Saturday, "The New York Times" reported that it attempted to reach representatives from both companies to get comments about the event, but the NBC representative listed in the announcement wouldn't be available until Tuesday and the Microsoft representative was "at an airport with two toddlers ready to fly home for the holiday." The result was a largely successful attempt to bury bad news during a time when most consumers aren't very interested in the news.

MSNBC began in 1995 with much fanfare, but the 24-hour cable news channel has struggled in the face of competition from the likes of CNN and "right-wing mouthpiece" FOX News, though MSNBC.com has since emerged as the most popular news destination on the Web. The year 1995 was a completely different era for Microsoft, which was trying to get into the Web content business. Since then, Microsoft has publicly stated that if it had known what a poor business decision starting MSNBC was going to be, it would never have started the news channel. The problem, of course, is money. After Microsoft foolishly agreed to a 99-year contract with NBC for MSNBC, the software giant was shocked to discover how much cash was required to keep the struggling station going. Microsoft pays NBC over $30 million a year in licensing fees alone.

Despite its antipathy about MSNBC, Microsoft continues its co-ownership of the Web site because it generates a lot of network traffic and advertising revenue. NBC also owns CNBC and is excited at the prospect of owning and running MSNBC in the coming years. And no, NBC isn't talking about changing the MSNBC name, which is a combination of the Microsoft (MS) and NBC brands. At least not yet.

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