of Electronic Media
MSNBC Online, the second joint venture, will be an Internet service encompassing the previous online news project produced by NBC for the Microsoft Network.
The plan is to create complementary 24-hour news and information services for cable TV and the Internet that will be integrated with NBC News.
NBC and Microsoft expect to invest $200 million over five years to fund the two services; Microsoft acquired a 50% stake in America's Talking for $220 million.
Robert Wright, NBC's president-CEO, said the companies expect the services to "redefine the way people get news and information in whatever form makes sense."
MSNBC Cable is the latest and perhaps the most potent of the planned challengers to CNN in the 24-hour news business.
Capital Cities/ABC said earlier this month it is planning a 24-hour news channel to launch in 1997 and last month Rupert Murdoch's News Corp. said he wanted to start such a channel.
Now NBC will get the jump on them both.
"What distinguishes this is the weaving together of the 'Net, broadcast and cable. [Ted] Turner doesn't have a broadcast network. ABC doesn't have a cable network in this regard. Neither has a tie-in with the leading online computer-oriented company in the world," said Tom Rogers, president of NBC Cable & Business Development and exec VP of NBC.
The two services, combined with NBC's broadcast network, are expected to cross-promote, share talent, news video and more while covering breaking events from around the world and offering analysis, commentary, special news programs, news summaries, local news and access to NBC News archives.
The advertising community was generally impressed by the plan.
"I wasn't sure about the long-term viability of America's Talking. Maybe this is a better direction for them. Microsoft certainly has the potential to be an extraordinary partner," said Steve Grubbs, senior VP for national broadcast buying at BBDO Worldwide, New York.
NBC, spearheaded by NBC News President Andrew Lack, will manage the cable network and will be in charge of news content for the interactive online service, to be cooperatively managed by NBC and Microsoft.
NBC Desktop still will operate as a business information service for investment brokers and institutional investors, but will be considered part of MSNBC Online.
"One of the great things that is illustrated here is this world of new media that requires unique partnerships," said Microsoft CEO Bill Gates.
"This is the very beginning of the interactive world, and I think by bringing the power of these two operations together on this, we'll be able to be a leader and make the news far more attractive than it has been," Mr. Gates said.
Jack Welch, CEO of NBC parent General Electric, said a key component of the agreement is that it brings GE together with Microsoft to share ideas and help prepare each other for the future.
The agreement is pending regulatory approval, but Mr. Wright did not expect any difficulties.
While changing the content and name of America's Talking caused some cable operators to question carriage agreements before hearing the full plan, NBC executives said the transition is consistent with the original design of the cable network and has generated a favorable reaction among cable operators they've talked to.
They have not discussed the plan with Tele-Communications Inc. or Time Warner, but plan to meet with those two companies and other cable operators in the next few months to prepare them for MSNBC's launch.
James Dolan, CEO of Cablevision Systems Corp., described the plan to replace America's Talking as "creative use of an existing asset" that would enhance value and growth.
In replacing America's Talking, MSNBC will launch with about 20 million subscribers with carriage commitments that will take it into 35 million homes by 2000.
"Cable operators are increasingly looking at how to participate in the new online world and here is a unique combination of a cable channel tied to an online service with the two of those cross-promoting each other and each reinforcing the strengths and the viewer appearance of each other that makes a whole new unique offering on cable," Mr. Rogers said.
Specific programming decisions have yet to be determined and Mr. Wright said he hoped many or all of the America's Talking staff will join the new service. He said he expected both CNBC and America's Talking President Roger Ailes and VP Beth Tilson to be involved.
Copyright December 1995 Crain Communications Inc.