Microsoft May Use MSNBC.com for New Services, Analysts Say
Microsoft may use MSNBC.com to unveil new services, despite giving up control of the MSNBC cable channel in the restructuring last week of its partnership with NBC Universal, analysts said. Microsoft decided to keep its 50% stake in the web site, while reducing its interest in the MSNBC cable channel (CD Dec 27 p9). NBC Universal agreed Fri. to buy a controlling stake in MSNBC, with the option to purchase all assets of the cable news channel within 2 years.
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MSNBC.com is an attractive vehicle for Microsoft’s Internet forays because it’s a top ranked site in a genre showing ad growth, while broadcast ad sales have been stagnant, said analysts. They speculated Microsoft didn’t see much benefit to owning a large stake in MSNBC because, unlike NBC Universal, the software maker doesn’t operate other cable networks. “They probably concluded justifiably that owning part of one channel doesn’t do a whole lot,” said independent analyst Dennis McAlpine. Meanwhile, he said, Microsoft is “doing a lot of work on the Internet, certainly with the Windows stuff, that I think they need to keep more active in.” MSNBC.com is the No. 2 U.S. news website, behind only Yahoo News, according to comScore Media Metrix.
MSNBC.com had more than 24 million visitors last month, 3% below a year earlier. Time Warner’s CNN and AOL News each had decreases of 17% or more. Microsoft’s MSN has also struggled recently (CD Oct 11 p7). Sales at the unit have been stagnant the past 2 quarters. Sales last quarter rose less than 1% to $564 million. “Relative to some key competitors, [MSNBC.com is] certainly faring much better,” said Jack Flanagan, senior vp-comScore Media Metrix: “It should give them hopefully a healthy reward in 2006 and beyond.” Officials at Microsoft and MSNBC.com weren’t available to comment right away.
Microsoft said it can use MSNBC.com to offer new services, in conjunction with its other Internet properties. One aim is to “push the boundaries for news delivery,” said a company spokesman, adding that last week’s deal “makes us even more able and more agile in terms of responding to what’s going on in the market.” Services such as streaming news, personalization of data and delivering content to mobile devices can be used with Microsoft properties including MSNBC.com, he said.
Microsoft could use MSNBC.com to offer products including e-mail, said Flanagan. Visitors to the Web site have higher household incomes and may spend more than the average American, said the analyst: “It’s a very valuable demographic to tap into with other types of services like e-mail.” The company can also use the site “to cross sell some of the other types of services that they have,” he said. Another analyst broadly agreed: “As opposed to a beachhead, it is a seat at the table to see what’s going on [with customers]…what works, and what doesn’t work,” said McAlpine. “By having a piece of that, they do get to see what the results are,” he said.