Blog Post

Viacom, Microsoft Team Up, Target Google

There is no love lost between Google and Microsoft. Same holds true for Viacom. So it doesn’t come as a surprise that Microsoft and Viacom have announced a deal that’s essentially You scratch my back and I scratch yours — and with about $500 million worth of scratching. Here is a precis of the news announcement:

What Microsoft Gets:

  • Microsoft will get video from Viacom and all related properties like Comedy Central and it will be available on MSN and XBox 360. Microsoft already distributes a lot of content from Viacom.
  • Microsoft will get casual games from Viacom.
  • Microsoft’s Atlas will be the ad server for Viacom. Viacom will provide unsold display advertising inventory on its digital sites for Microsoft to sell and serve.

What Viacom Gets:

  • Money. A lot of it. “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.”

Who is the winner?
The five-year-deal is pegged at a base value of $500 million, though the two sides are not talking precise financial terms. I suspect it’s going to favor Viacom.

Viacom doesn’t have to spend anything and at the same time it is getting advertising dollars and more distribution for their content. I get a feeling that, going forward, this is going to become a template deal for all large media companies with content assets. For them it’s a green light to pillage Microsoft’s overflowing coffers.

Deals like this will increase the pressure on Google to do similar ones with other content providers, mostly to thwart Microsoft’s advertising ambitions.

3 Responses to “Viacom, Microsoft Team Up, Target Google”

  1. There is also the issue of Google using ad revenues to fund product development for viable substitutes to Microsoft’s cash cows (office productivity and small/mid-range server products). Providing a better advertising deal for advertisers means less money to Google to build products that can compete against Microsoft products.