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NBC U Takes Control of MSNBC

NBC Universal has bought a controlling interest in low-rated cable news network MSNBC from Microsoft Corp, putting an end to one of the more strained partnerships in cable TV.

The computer giant is shedding the TV channel while keeping its interest in the Web site.

NBC will now have an 82% stake in the channel and an option to acquire the remaining 18% after two years. The companies will continue to jointly own, which is one of the most popular news Web sites.

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

Financial terms of the deal were not disclosed. Since the network's launch in 1996, Microsoft has largely been a silent partner but still contributed about $30 million per year to the network. The new terms allow for the possibility that NBC could change the name of the network.

An NBC executive familiar with the deal said the two sides have been negotiating for the last year, with talks heating up this fall.

Microsoft shed another media asset last year when it sold its interest in online magazine, Slate, to the Washington Post Co.

MSNBC has struggled to make a dent in the cable news ratings. The network, which is based in Secaucus, N.J., lags well behind News Corp.'s Fox News Channel and Time Warner's CNN in the Nielsen ratings.

In recent years, it has made a number of high-profile attempts to revive its programming, including shows hosted by former talk show host Phil Donahue, former Minnesota Governor Jesse Ventura, and politician Alan Keyes. None succeeded.

In February 2004, the network brought in former CNN and ABC News executive Rick Kaplan, but so far new programs launched during his tenure -- including programs hosted by former Crossfire co-host Tucker Carlson and ex-Fox News anchor Rita Crosby -- have not been ratings hits.

In a news release, Microsoft limited its comments to the Web site.

"Together, Microsoft and NBC Universal have grown to the No. 1 news site," Bruce Jaffe, Corporate VP, Microsoft said. "We are totally committed to taking to even higher levels of success through our unparalleled marriage of technological innovation and news content."