The 16-Year Itch: Microsoft, NBC Call It Quits, NBC Gets Custody Of MSNBC.com

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They came together with a common worldview and complementary personalities. Then, as they grew older and grew apart, they still tried to make it work — for the sake of the child, at least. Now that that kid is a teenager, they’ve decided now is probably the best time to finally call curtains: After 16 years, Microsoft and NBC are parting ways in their joint news venture, and NBC is getting custody of their kid, MSNBC.com.

As of Sunday night, MSNBC.com is no longer going by that name: it’s now NBCNews.com. Meanwhile, Microsoft is looking to refresh its own MSN.com news operation, and is now in the process of staffing up for a relaunch later this year.

In the process, there has also been a financial transaction to end the JV. NBC’s own story on the deal didn’t disclose the terms, but Brian Stelter at the New York Times did: Microsoft is getting $300 million for its 50 percent stake in the JV, according to his sources. He notes that a “portion” of that price is coming from MSNBC’s past profits, although it’s not clear whether it is a profitable operation at the moment. Most of the site’s 300 employees will stay on post-JV and will be employed by NBC, writes NYT.

Why, exactly, the separation? Well, it’s actually a lot like a relationship between two people, who had perhaps first linked up when they were young, but have failed to find such common ground as they’ve matured. In the earlier days of the web, NBC and Microsoft linking up for coverage was based more around an ideal of how convergence would work for the media world: NBC had the chops for content, but not necessarily for execution — something Microsoft had in spades as one of the earliest and biggest online portals.

That’s evolved quite a lot over the years for media companies. For NBC’s part, the Comcast-owned broadcaster has been making a huge push into digital to complement (and perhaps one day offset) revenues from traditional TV advertising. That has been helped by the rise of smartphones, tablets, better online video technology, broadband growth — and a collective, consumer-led decision that online, not TV, is often now the first port of call for news and information. If NBC wants to really “own” those consumers, it needs to be able to do it on its own terms, rather than those jointly agreed with Microsoft.

It’s also most likely a move that has been decided from the top: the new NBCNews.com site will be a part of NBC News Digital, a new division led by Vivian Schiller, who joined NBC as chief digital officer from NPR in 2011. That division also includes tv.msnbc.com, TODAY.com,  theGrio.com,NBCLatino.com, NBCPolitics.com, EducationNation.com, and NightlyNews.com.

“This deal represents so many opportunities for NBC News, including the ability to better align television with digital, innovate around how we deliver content to consumers, and fully integrate digital into everything that we do,” said Schiller in a statement sent to TechCrunch. “Through this new structure, we’ll grow by engaging users with our content directly, and on every platform. This is a different model from the rest, and given where the future of online news is trending, we see it as a model with staying power.”

It will be interesting to see whether NBCNews.com will be able to grow its business (either by revenues or audience, or both) independent of MSN: the site currently ranks third behind rival broadcasters’ sites: ABC (which has taken a different approach and has tied up recently with Yahoo) has 81 million unique visitors; CNN has 56 million, to MSNBC.com’s 50 million.

On Microsoft’s side, the deal would have originally worked as a way of better anchoring its MSN.com portal with exclusive content from NBC. But as declines at Yahoo and AOL also show, the “portal” does not have the same kind of currency now as it did 16 years ago. For Microsoft’s part, it’s putting a lot of focus into reviving Bing, its search business, against Google.com, and its attention is now about how it can leverage its extended online operation into a content complementary to its efforts in its Windows platform on PCs, tablets and phones, TVs and more. That will need as wide a content net as possible for maximum impact, and in that context a straight deal with NBC sounds, frankly, limiting.

NBC is trying hard to drive the new brand home to users, running pop-up messages and banners across the main site with the new URL and an announcement of the change. But the proper switchover will take more time — two years, NBC says. Not only are there are still lots of references all over the site to MSNBC — including, as far as I can see, all the URLs beyond the homepage — but there are existing ad sharing deals in place, as well as those for content sharing.

Before the announcement, NBC was the sole third-party provider of news to MSN.com; and MSNBC.com didn’t have other third-party partnerships, pooling the content from their collective editorial and television producing operations. Now both sides are touting how they may still share content with each other; but they will also be looking to partner with others that would have been verboten before. Or, to push that divorce metaphor a little bit more, they’re now playing the field, and and finding their feet as newly-minted singletons once again.

NBC has already name-dropped (our AOL stablemate) Huffington Post as one partner. As the NYT piece notes, NBC has actually been speaking with HuffPost already this year, but the “terms of the JV limited how far those talks could go.” Now, NBC News president Steve Capus says, “We’re open for business.” MSN.com’s GM Bob Visse, meanwhile, didn’t name any specific third parties in this AFP story, but the story makes clear that it, too, will be “free to forge partnerships with other media organizations.”

For consumers who pay attention to these things, the switchover may prove to be a bit confusing. Putting aside the two-year process of rebranding with the new name, sorting out new content partnerships, and separating advertising deals — the MSNBC brand will continue to live on anyway. It’s also a cable channel (which currently provides lots of content to MSNBC.com) and that cable channel will soon have its own web home, in the form of MSNBC.com. Microsoft’s stake in that cable channel was actually sold to NBC in 2005 — so perhaps now that the online site’s ownership has been resolved, we may see a rebranding here, too.

And even after two years, this may not be the end-end for MSN and NBC. MSN was and still is a significant traffic generator for NBCNews.net (nee MSNBC.com) — about half of MSNBC.com’s 50 million monthly unique visitors come by way of Microsoft’s portal. This is partly why it will take two years to sort everything out, and why at the end of that we may yet continue to see some strong connections remaining between the two. Kind of like a divorced couple who still remain civil and may even sit next to each other when their child graduates from high school.