Microsoft, NBC to offer news Joint venture plans 24-hour news on cable, on-line Internet service

December 15, 1995|By Michael Dresser | Michael Dresser,SUN STAFF

Two of the world's most powerful industries converged with a bang yesterday as software giant Microsoft Corp. and NBC announced plans for two news services that would reach viewers through cable television and the Internet.

In the more conventional of the two ventures, the companies said they have formed a 50-50 partnership to launch a 24-hour cable news channel that would compete directly with Ted Turner's CNN.

But in a move with even greater potential impact, the companies cemented an alliance that could bring Tom Brokaw and the NBC Nightly News to your computer screen.

They agreed to create an interactive on-line news service that will be distributed through the Microsoft Network, the Internet-connected service built into every copy of the company's Windows 95 operating system. "Some very interesting and powerful creature will be created, but I don't know what it is," said Steve Rosenbaum, president of the Broadcast News Network. "There's going to be some kind of marriage between television and computers and here is the logical place to do it."

In a media industry where mega-deals are measured in billions of dollars, the Microsoft-NBC venture would not rank high. Contrary to rumors, the companies did not announce a direct Microsoft investment in NBC itself.

Microsoft will pay $220 million for a half interest in NBC's America's Talking cable channel, which will become the vehicle for the news venture. In addition, the two companies agreed to invest about $200 million apiece over five years to get the cable and on-line ventures up and running.

More than any other corporate deal to date, the deal underscores the blurring of lines between the computer industry and the media.

It creates a direct alliance between the world's most powerful software company, whose operating systems control more than

80 percent of the world's personal computers, and one of the nation's Big Three broadcast networks.

And in what could turn out to be a crucial twist, it forges a bond between two of the world's most formidable corporate executives -- Microsoft Chairman Bill Gates and John Welch, the chairman of General Electric, which owns NBC.

Christopher Sterling, director of the National Center for Communication Studies at George Washington University, said the success of the venture could turn on that relationship.

"Can they cooperate? Can they get along? Very different guys," Dr. Sterling said.

NBC executives said the cable and on-line ventures will draw extensively upon the news-gathering resources of NBC's broadcast news operation.

The cable venture, which will be known by the "interim" name MSNBC Cable, will in effect replace the America's Talking channel in about six months.

Mr. Rosenbaum said America's Talking had never caught fire as a programming concept but that its subscriber base of 20 million would serve as an effective springboard for MSNBC.

By attracting such a powerful partner in its bid to steal market share from CNN, NBC may have outflanked some of the other companies that have expressed interest in mounting a challenge to CNN -- notably ABC and Rupert Murdoch's News Corp.

The alliance raised some questions about Microsoft's ability to influence news coverage, but NBC President Bob Wright dismissed those concerns.

"Microsoft will have no role in the editorial, the news-gathering," he said.

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