NBC TO TAKE MAJORITY STAKE IN MSNBC.(Business)

Byline: Compiled from Post news services

Microsoft Corp. on Friday said that, after months of negotiations it had sold a controlling stake in the 24-hour cable news channel to partner NBC Universal, which also received an option to buy the rest of MSNBC within two years.

Financial terms weren't disclosed, but NBC Universal, a unit of General Electric Co., will now own 82 percent of the network that is home to such programs as "Hardball With Chris Matthews," "Countdown with Keith Olbermann" and "Scarborough Country." The companies said they would continue to share ownership of MSNBC.com, which has become one of the most poplar news sites on the Web even as the TV channel was later eclipsed by News Corp.'s Fox News Channel, which also went live in 1996.

Today MSNBC still ranks a distant third behind Fox News and Time Warner Inc.'s CNN in the Nielsen ratings, with just 257,000 viewers in November, versus 449,000 for CNN and 889,000 for Fox News.

The companies declined to disclose financial terms of the deal, which had been expected for months. At the time the venture was announced in 1995, Microsoft said it would invest $220 million for a 50 percent stake in the network.

The deal portends the eventual unraveling of what had been a landmark television joint venture when it was unveiled a decade ago. The teaming of Microsoft, the world's largest software company, with one of the biggest news operations was part of a larger investment strategy that Microsoft Chairman Bill Gates hoped would pay dividends by giving the company the content it needed to gain a powerful foothold in the Internet as it took off.

Microsoft executives realized several years ago, however, that they're better off creating software and Internet services for distributing content, rather than paying people to create that content. The Redmond, Wash.-based software giant sold its online magazine, Slate, to Washington Post Co. last year and has been looking for a graceful way out of the cable channel.

NBC had always had editorial control of MSNBC, which was the proving ground for NBC's new evening anchor Brian Williams. With majority ownership of the network, NBC will now be able to consolidate MSNBC's back-office functions with its other cable networks including CNBC, a business news channel.