"Playing hardball as it prepares to enter the on-line
computer services business, Microsoft Corp. has wooed NBC away
from rivals America Online and Prodigy with a lucrative deal
under which the software giant will pick up the broadcaster's
expenses for developing computerized versions of its programs for
the Microsoft Network," according to Julie Pitta in today's L.A.
TIMES. NBC Multimedia Senior VP Marty Yudkovitz: "We're
spending Microsoft's money to create content that we will own"
(L.A. TIMES, 5/17). NBC will use all of its segments for the
area, including NBC Sports and CNBC (N.Y. POST, 5/17). Microsoft
Chair Bill Gates cited coverage of the '96 Olympics in outlining
the content possibilities (N.Y. TIMES, 5/17). While NBC will
pull its content from AOL and Prodigy, the deal will allow
Microsoft to sign on other networks. According to Pascal Zachary
of the WALL STREET JOURNAL, Gates "made it plain that he hopes to
rely on the entertainment and news expertise of NBC and others to
build the biggest on-line network in the world" (WALL STREET
JOURNAL, 517).
REACTION: In Washington, Kara Swisher calls it "yet another
sign that TV and computing are becoming more alike" (WASHINGTON
POST, 5/17). In New York, Mark Landler writes that the details
were so "fuzzy" that some analysts saw it as "the digital-age
equivalent of agreeing to be friends." But the news did have a
"measurable impact" on America Online and Prodigy. AOL stock
fell $3.125 to $38.625 on Nasdaq, while stock of Prodigy's
parents, IBM and Sears, also suffered slight losses (N.Y. TIMES,
5/17). In San Francisco, Michelle Quinn writes, "On the surface,
the deal appears to favor Microsoft, at least as a public
relations coup." Some analysts also speculate that the spread of
Microsoft Network content deals "could mean it's game over for
America Online and the other online services such as Prodigy"
(SAN FRANCISCO CHRONICLE, 5/17). Several reports note the deal
is also a bad sign for GE's own struggling commercial online
service -- Genie (Mult., 5/17).
MERGER IN THE MAKING? AT&T's intentions with Time Warner
are examined in USA TODAY and the L.A. TIMES. USA TODAY's Kevin
Maney reports that it is "unlikely" AT&T will buy a stake in Time
Warner, with a joint venture more likely (USA TODAY, 5/17). In
L.A., Sallie Hofmeister reports that industry execs said allying
with AT&T "would give Time Warner the best brand name in the
phone business, a clear advantage in its effort to sell phone
service to cable subscribers" (L.A. TIMES, 5/17). Time Warner's
annual shareholders meeting starts tomorrow (Mult., 5/17). In
other news, AT&T filed with the SEC to sell 25% of its stake in
video game maker, 3DO. AT&T plans to sell the rest of its
investment -- 1 million shares or 2.5% of the company --during
the next year (SAN FRANCISCO CHRONICLE, 5/17).
