In yet another move to strengthen the anti-Google coalition, Viacom announced a complicated deal with Microsoft that combined Web advertising, TV advertising, video licensing, and an online gaming partnership. Back in April, Viacom signed another deal with Yahoo for search advertising across its sites, which is still in place. The media company’s Web strategy seems motivated by its hate for Google as much as anything else.
Here is the short version of today’s deal. (Bear with me). Microsoft’s Atlas business (part of recently purchased aQuantive) will serve display ads across Viacom’s U.S. sites, which include MTV.com and ComedyCentral.com, and get an exclusive right to sell remnant inventory as well. The value of the deal is $500 million to Microsoft, but it is hard to tell exactly where that comes from because there was a lot of bartering going on. For instance, as part of the deal, Microsoft agreed to purchase TV ads on Viacom’s cable networks like MTV, Comedy Central, and BET, as well as some of those online ads that it will be serving. Microsoft will also license video from Viacom TV shows and movies on MSN. (Round and round is the name of the game . . . ). So the $500 million is most likely the net amount after the value of all of these sub-deals were calculated.
Media companies love doing complicated deals. They used to call it synergy, but they usually turn to be sub-optimal. Rather than striking the best online advertising deal, the best TV advertising deal, or the best content licensing deal on a standalone basis, everything gets cobbled together in a take-it-or-leave it proposition. Inevitably, some of the underlying business units from both sides end up getting screwed. But by that time the corporate biz dev guys are onto their next deal.
In other Viacom news, MTV Networks signed up Hollywood producer Jerry Bruckheimer to make video games. I think we all know how that’s going to turn out. Hollywood has been trying to get into the videogame business for years by bringing star power to the medium. The results have been largely uninspiring. What most Hollywood types tend to ignore is that in videogames, the stars are the players themselves.