Viacom Incorporated and Microsoft Corporation have negotiated an agreement under which major divisions of both companies will collaborate on advertising, content distribution, event promotions and games over the next several years. 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. It doesn’t take a genius to figure out that this will be (assuming everything goes well) a huge benefit to both business giants.
Microsoft will license (non-exclusively) content from across Viacom’s cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures, for use on Microsoft services, such as MSN and Xbox 360. 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. As well, Microsoft’s Atlas division will become the ad server for Viacom’s U.S. Web sites. Viacom will work with Microsoft on opportunities to become a preferred publishing partner across Microsoft’s casual gaming platforms.
“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. This deal is another milestone in our quest to build a world-class advertising platform to serve the broad needs of advertisers and publishers. If ever there was a ‘win-win’ partnership across two companies, this is it,” said Kevin Johnson, president of Microsoft’s Platforms & Services Division.