msnbc.com
updated 12/23/2005 12:12:00 PM ET 2005-12-23T17:12:00

NBC Universal will assume majority control of the 24-hour cable channel MSNBC under a restructuring of its 10-year-old joint venture agreement with software giant Microsoft, the two companies announcedFriday.

News Web site MSNBC.com will continue to be operated as a joint venture, with each company owning 50 percent, the two companies said.

Under the new arrangement, NBC Universal, a majority-owned subsidiary of General Electric Co., has the option to buy Microsoft's remaining share of the cable channel to take 100 percent ownership within two years.

“Acquiring a controlling interest in MSNBC will allow us to fully integrate the channel into our news operations and our overall cable platform," NBC News President Steve Capus said in a statement. "MSNBC is a critical component of NBC News' success and has made some key viewership gains in recent months."

Since its inception in 1996, MSNBC has struggled in both daytime and prime-time ratings, and is currently lagging far behind rivals Fox News and CNN. In the third quarter, the cable channel averaged 300,000 viewers during the day and 471,000 in prime-time hours, according to Nielsen Media Research.

CNN pulled in an average of 1.1 million prime-time viewers, and Fox had 2.3 million. CNN's Headline News channel was about even with MSNBC in prime-time viewership.

However, NBC officials say the cable channel has been increasing its market share and closed its prime-time gap with CNN in November to its smallest level in nearly three years.

Meanwhile MSNBC.com generally has ranked No. 1 or close to it among the top news Web sites in recent months and declared its first full year of profitability, although the site's parent companies do not break out revenue and income numbers for the unit.

Executives of both Microsoft and NBC said they remain committed to the success of the Web site, which will not be affected by the shift in the cable side of the joint venture, according to  Charlie Tillinghast, president of MSNBC.com.

"It’s business as usual" for MSNBC.com, he said in an interview. "In case anyone wondered whether one or both partners were fully committed to the venture, the fact that this agreement has been reaffirmed should dispel any of those perceptions."

Under the deal, MSNBC.com retains online rights to NBC News content, including video from the “Today” show, “Nightly News” and CNBC television and MSNBC cable, he said.

Microsoft and NBC did not disclose financial details of the new arrangement.

When the high-profile joint venture was announced in December 1995, Microsoft paid $220 million for a 50 percent interest in the fledgling cable channel. The two companies also agreed to pour $200 million into launching the Web site.

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