MORE MULTIMEDIA MERGER-MAKING: MICROSOFT & NBC JOIN FORCES
Published May 17, 1995
"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).