Marriage of Titans: Viacom, Microsoft Forge $500 Million Alliance

December 21, 2007
Viacom and Microsoft have announced a broad, long-term alliance to collaborate on advertising, content distribution, event promotions and games over the next several years.

As part of the deal, Microsoft has (nonexclusive) licensing rights for content from across Viacom’s cable channels and Paramount Pictures (but not, apparently, its CBS products) 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. websites. Microsoft will provide Viacom with its proprietary ad serving solution, Atlas AdManager, which it obtained in its $6 billion acquisition of aQuantive Inc. in August 2007.

Also, viewers could be treated to Microsoft ads when they watch “Pimp My Ride” and other Viacom offerings. Under the deal, 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.

The deal will affect video-game junkies as well, as Viacom will work with Microsoft on opportunities to become a “preferred publishing partner” across Microsoft’s casual gaming platforms.

Detailed financial terms were not disclosed, but the companies projected a base value of approximately $500 million between the two companies over the initial five-year length of the agreement.

“We are very impressed with how closely Microsoft’s business plans complement our strategic objectives,” said Viacom chief Philippe Dauman. “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. By taking advantage of industry leading assets at both our companies, this landmark alliance brings valuable promotional power and increased monetization to our wide portfolio of branded websites, which collectively represent the leading entertainment presence online.”

“Viacom’s portfolio of original content and strong consumer brand connections are a terrific complement to Microsoft’s web, gaming and digital advertising assets,” said Kevin Johnson, president of Microsoft’s Platforms and Services Division. “This deal is another milestone in our quest to build a world-class advertising platform to serve the broad needs of advertisers and publishers. If ever there was a ‘win-win’ partnership across two companies, this is it.”

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