Microsoft, Viacom Partnering on Digital Content, Advertising

Content from Viacom Cable Networks, Paramount Pictures to Be Licensed for MSN, Xbox Live

By Alex Weprin -- Broadcasting & Cable, 12/19/2007 12:13:00 PM

Microsoft and Viacom formed a partnership encompassing both the digital distribution of Viacom content on Microsoft properties and a new advertising-sales agreement.

While the financial terms of the deal were not disclosed, it was estimated to have a base value of approximately $500 million.

As part of the deal, Microsoft will license long- and short-form content from across Viacom’s cable networks and Paramount Pictures for use on properties such as MSN and Xbox 360’s Xbox Live service. A number of shows, including Comedy Central’s SouthPark, have been made available on the service in the past. The agreement opens up the door to additional programs or movies being made available for download.

In addition, the companies formed an extensive advertising partnership, with Microsoft’s Atlas AdManager becoming the ad server for Viacom’s U.S. Web sites, allowing Microsoft to sell leftover ad inventory and split revenues with Viacom.

Microsoft will also buy advertising on Viacom networks and digital assets, and it will form exclusive sponsorship agreements for at least four Viacom awards shows, including the MTV Video Music Awards and BET Awards.

"We are very impressed with how closely Microsoft's business plans complement our strategic objectives. This is a novel and comprehensive partnership that demonstrates the scale of our digital operation and the value of our branded content across all distribution platforms,” Viacom CEO Phillippe Dauman said in a statement. “Microsoft's superior assets and expertise in the ad-serving and sales business will drive enhanced value to our digital operations.”

Earlier Wednesday, Viacom subsidiary MTV Games struck a deal with producer Jerry Bruckheimer to create new video games for the nascent game studio. The deals with Microsoft and Bruckheimer give Viacom leverage and experience in developing new video games for both hard platforms such as the Xbox 360 and online sites such as MTV.com.