The MSNBC Split: So What Now?
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
You've probably heard by now that Microsoft (NASDAQ: MSFT) and Comcast Corporation's (NASDAQ: CMCSA) NBC have parted ways after a 17 year joint venture that created the MSNBC news network and the related MSNBC.com website. NBC reportedly paid $300 million for Microsoft's 50 percent stake in the MSNBC.com website, finalizing a split that began seven years ago when Microsoft sold its stake in the MSNBC cable network.
Both parties say that the split is amicable, and as rarely as it happens there's good reason to believe that it really is the case this time. While the MSNBC partnership likely sounded like a good idea to both Microsoft and NBC back in 1995, in recent years it has evolved into something that neither company particularly wanted but were limited on what they could do to change it. The MSNBC network evolved into somewhat of a liberal counterpoint to FoxNews' conservative viewpoint which didn't sit well with Microsoft's desire for a neutral point of view, while the network had to avoid some potentially useful partners that NBC would have preferred because they would have conflicted with Microsoft's interests. With the final bond between the two companies dissolved they are now unbound to do as they please.
MSNBC.com currently reroutes to NBCNews.com and will continue operating under that name as a fully NBC-owned news portal. The site is still hosted on Microsoft-maintained servers at the moment, but that will change as soon as NBC prepares a new digital home for the site in New York. The Redmond, WA headquarters for MSNBC will be rebranded as the NBC News Innovation Center, allowing most if not all of its current employees to keep their jobs without having to relocate.
Microsoft plans to create its own online news service that will compete with NBCNews.com and other news portals, though it remains to be seen how successful it will be. Before the split, MSNBC.com was the number 4 news portal on the web; Microsoft will be starting as a brand new service and will have to compete not only with NBCNews.com but also with sites such as Time Warner's CNN.com and Yahoo's Yahoo! News. Given that Microsoft has a less-than-stellar track record with online properties (even the company's Bing search engine, second only to Google (NASDAQ: GOOG), is notorious for bleeding money) it's unlikely that the new Microsoft news outlet will shoot to the top of the online news world. Even with the Microsoft name behind it, the site will still need to compete with the established outlets plus surprising up-and-comers such as Google's YouTube video service that was recently revealed in a study to be a major source of news for a growing number of people.
Right now, Microsoft's best bet is to create a news service that surpasses expectations. It's unlikely that they'll reach the number 1 slot, but if they can at least make a strong showing then they may gain at least some leverage as a news outlet that they lacked when they were seen as just the "MS" in MSNBC. While NBCNews.com will likely continue to evolve into an online extension of the MSNBC network's shift toward slightly more liberal programming, Microsoft has a chance to develop the truly neutral (or at least mixed liberal and conservative) viewpoint that caused it to move away from involvement with MSNBC in the first place. A news source like that could likely find a strong following, and might even develop into a financially successful venture for Microsoft.
All of this is assuming that Microsoft doesn't opt for the easy way out and create a news service that only republishes news from the Associated Press and other syndicated sources. Given that the company is still focused on software such as Windows 8 and Office 15 and hardware such as the Xbox line and the recently-announced Surface tablet, it remains to be seen how much effort Microsoft will put into creating a news portal that's unique from the competition.
Croaxleigh has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and Microsoft. Motley Fool newsletter services recommend Google and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.