Microsoft Dumps NBC To Launch Its Own News Service

by Trefis Team
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Microsoft
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Microsoft (NASDAQ:MSFT) has ended its news content partnership with NBC, which was behind MSNBC, one of the oldest online news portals dating back to 1996. It has sold off its 50% stake in the joint venture to NBC for about $300 million. Following this move, Microsoft is now free to launch its own news service while MSNBC users will be redirected to NBCNews.com. [1]

Check out our complete analysis of Microsoft

The partnership was apparently “limiting” Microsoft by restricting it from working on expanding the portal to include multiple news sources. Microsoft plans to build a full fledged news portal along the lines of Yahoo (NASDAQ:YHOO) and AOL‘s (NYSE:AOL) news properties, and may also include an automated search-powered aggregation component like Google (NASDAQ:GOOG) News, powered by Bing.

The news portal by Microsoft will be a part of its Online Services division. If done right, it could drive a significant amount of traffic to Microsoft’s online properties, generating additional display ad revenue. You can check the impact of any increase in visitors on Microsoft’s online properties on its display ad revenue and its overall value using this chart, but we doubt there will be any major impact:

Display ads form a small part of Microsoft’s overall Online Services business, which accounts for less than 1% of its overall value. We currently have a $40 Trefis price estimate for Microsoft, which stands nearly 30% above its market price.

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Notes:
  1. Microsoft and NBC Complete Web Divorce, NYT []
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