Viacom and Microsoft Corporation today announced a broad-based, strategic alliance under which major divisions of both
companies will collaborate on advertising, content distribution, event promotions and games over the next several years.
The comprehensive agreement spans across the two companies and includes a number of significant components. Among them:
-- Microsoft will license, on a non-exclusive basis, long and short-form television and theatrical content from across Viacom's cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures 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. websites and Microsoft will have the exclusive right to sell remnant display advertising inventory on Viacom's U.S. websites.
-- 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;
-- 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 deal has a projected base value of approximately $500 million in financial considerations and business services between the two companies over the initial five-year length of the agreement. The deal includes a combination of revenue sharing provisions, guarantees and content licensing agreements.
The agreements contemplate the potential for expansion of the transactions.
Philippe Dauman, President and Chief Executive Officer of Viacom, said, "We are very impressed with how closely Microsoft's business plans complement our strategic objectives.
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. Microsoft's superior assets and expertise in the ad serving and sales business will drive enhanced value to our digital operations."
Dauman added, "We look forward to collaborating closely with Microsoft. This partnership will generate significant value on both sides. This deal is an important example of how the growing success of our digital properties is driving greater revenue for Viacom as a whole."
Kevin Johnson, president of Microsoft's Platforms & Services Division, said, "We are delighted to establish this long-term partnership with Viacom. Viacom's portfolio of original content and strong consumer brand connections are a terrific complement to Microsoft's web, gaming and digital advertising assets.