MS Begins Exit of MSNBC Partnership

Microsoft continued to quietly back away from its partnership with NBC Universal for MSNBC Friday. The two companies announced that NBC had acquired a controlling interest in the cable channel, and has the ability to exercise an option that would allow it to buy the entire channel in 2007.

Steve Capus, president of NBC News, said the deal would allow the company to further integrate the cable channel into the news business. However, he did not elaborate on what exactly that would entail.

Rumblings over a change of heart in Redmond first appeared in 2001. Microsoft CEO Steve Ballmer said in an interview in June of that year that he would likely have not started MSNBC if he had a chance to do things over again.

Rumors of talks between the two companies to form an exit strategy for Microsoft also resurfaced in March of this year, which have proven to be true. However, Microsoft has repeatedly said it remains committed to the Internet portion of the site, and Friday's deal left the joint partnership there as is.

The move follows a pattern by Microsoft of selling off non-crucial assets to focus on its core business. For example, it sold online magazine Slate to the Washington Post in December 2004, confirming speculation that it wanted to exit the content business.

MSNBC has long suffered from long ratings. Initially, it stood in a solid second place to market CNN, but as Fox News became popular it fell to third and slowly began to bleed viewers. Recently, CNN Headline News passed the channel, pushing it further behind the two leaders.

According to the Wall Street Journal, the two sides had their own reasons for ending the partnership.

Microsoft is upset that the expected synergies that spurred the channel's creation never happened, while NBC would rather run the channel on its own and rebrand it to remove any mention of a partner who is no longer interested in the broadcast side of the business.