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The $500 Million Microsoft-Viacom Deal

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The $500 Million Microsoft-Viacom Deal

The press release lead says:

Companies sign landmark multiyear deal to collaborate on content distribution, advertising, event promotions and gaming; Microsoft’s Atlas to become exclusive ad serving platform for Viacom U.S. Web sites.

How much was the deal worth? A project base value of approximately $500 million in financial considerations and business services between the two companies. The deal encompasses revenue sharing provisions, guarantees and content licensing agreements.

The Microsoft-Viacom deal has four components namely:

  • Microsoft will license, on a non-exclusive basis, long- and short-form television and theatrical content from across Viacom’s cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures, for use on Microsoft properties such as MSN and Xbox 360.
  • Microsoft’s Atlas division will become the ad server for Viacom’s U.S. Web sites and Microsoft will have the exclusive right to sell remnant display advertising inventory on Viacom’s U.S. Web sites.
  • Microsoft will buy advertising on Viacom broadcast and online networks over a five-year period and the companies will work together on promotions and sponsorships for MTV Networks and BET Networks award shows.
  • Viacom will work with Microsoft on opportunities to become a preferred publishing partner across Microsoft’s casual gaming platforms.

Philippe Dauman, president and chief executive officer of Viacom, justifies the deal by saying that Microsoft’s business plans complement Viacom’s objectives. Specifically Microsoft’s assets and expertise in the ad serving and sales business will drive enhanced value to Viacom’s digital operations.

“We look forward to collaborating closely with Microsoft as we move forward. This partnership will generate significant value on both sides. This deal is an important example of how the growing success of our digital properties is driving greater revenue for Viacom as a whole,” says Dauman.

For its part, Microsoft’s president of Microsoft’s Platforms & Services Division, Kevin Johnson said that Viacom’s portfolio of original content and strong consumer brand connections will complement Microsoft’s Web, gaming and digital advertising assets.

“This deal is another milestone in our quest to build a world-class advertising platform to serve the broad needs of advertisers and publishers.”- says Johnson.

So, amidst all the nitty gritty of this deal, whether we understand this deal or no matter how we look into the details, the only clear picture that we could probably see is the fact that, somewhere in the Silicon Valley, another industry player is probably planning for its next move that would somehow overshadow this current deal announcement. Alright, Google is probably fuming mad and up on its feet for its next major announcement. And with the long break to come, Google better act fast. It’s better to end the year with a bang coming from its rank rather than somebody else ending it.

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Arnold Zafra

Arnold Zafra writes daily on the announcements by Google, Ask.com, Yahoo & MSN along with how these announcements effect web ... [Read full bio]

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