Viacom, Microsoft in Content, Ad Partnership

NEW YORK/REDMOND, December 19: Viacom and Microsoft
Corporation have entered into a strategic alliance, estimated to have a base
value of about $500 million, to collaborate on advertising, content
distribution, event promotions and games over the next several years.

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 for use on Microsoft properties such as MSN and
Xbox 360. In addition, 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 those sites. Microsoft will also 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 also work 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.

"We are very impressed with how closely Microsoft’s
business plans complement our strategic objectives,” said Philippe
Dauman, the president and CEO of Viacom. “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, "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."

—By Mansha Daswani