After a decade of declining ratings and unfulfilled promise, Microsoft Corp. and NBC Universal have decided to unwind their MSNBC partnership, with the latter boosting its stake in the news network from 50% to 82%, with an option to take 100% control in the next two years.

Microsoft will retain its interest in the MSNBC.com Web site. Terms of the deal were not disclosed.

The deal ends what has been at times a contentious relationship — NBC could not invest in the network without Microsoft’s approval — and is in line with Microsoft’s recent moves to exit content businesses.

In January 2005, Microsoft sold online magazine Slate to The Washington Post Co. for an undisclosed sum.

But despite its sluggish ratings, MSNBC is profitable. According to Kagan Research Inc., the channel will generate $144 million in advertising revenue and $114 million in subscriber fees in 2005. Kagan estimated cash flow at $26.5 million in 2005.

Although terms of the deal were not disclosed, it is expected that MSNBC received an attractive valuation based on the 85.1 million homes the network reaches. When Viacom Inc. bought the 50% it didn’t own of Comedy Central from Time Warner Inc. in 2003, it paid about $30 per subscriber for a network that reached 81.8 million homes. Placing that value on MSNBC would put the Microsoft stake at about $1.3 billion.

While it is unlikely that MSNBC fetched that high a price, even at $15 per subscriber, the network would be worth $1.2 billion, with Microsoft’s interest valued at $600 million.

When MSNBC launched in December 1995, the network was supposed to fuse traditional television with the Internet. At the press conference announcing the deal, NBC CEO Bob Wright called the partnership “a unique opportunity for us to take the whole concept of broadcast cable and PCs to a different level.”

Microsoft initially invested $220 million for its 50% interest in the network. According to published reports, Microsoft also contributed about $30 million annually to MSNBC.

With greater control of the cable network, NBC will be able to merge the finances of its broadcast news operations with MSNBC, allowing it to spread its costs over a larger base.