news Sixteen years after the founding of the company during the first dot-com boom, global technology giant Microsoft has finally revealed plans to sell its 50 percent stake in online venture ninemsn, with television partner Nine to take full control of the joint venture.
Ninemsn was first established back in 1997, as software giants such as Microsoft were attempting to leverage their offline technology assets into the fast-growing dot-com media environment. At that stage, Microsoft and joint venture partner PBL reportedly put a total of $50 million into the company, which brought together the media assets of PBL (then including Nine, Australian Consolidated Press and other assets) as well as local ad sales for Microsoft properties such as Hotmail, which Microsoft also bought that year.
However, in a media release issued this morning, Nine Entertainment Co chief executive David Gyngell announced that terms had been agreed with Microsoft which would see Nine buyout Microsoft’s 50 percent share of ninemsn (now known as Mi9, but still maintaining the ninemsn site name)
As part of the arrangement, Microsoft has signed a long term strategic partnership agreement, whereby Mi9 will continue to represent Microsoft’s suite of advertising products, while leveraging what Nine called the company’s “world leading technology, data, insights and innovation”.
“This agreement allows NEC to retain the key elements of our almost two decade strategic partnership with Microsoft. It strengthens the platform for NEC’s growing digital video business and ultimately allows us to control 100% of our digital future,” Gyngell said.
“Mi9 is a true leader in Australia’s digital marketplace and we’re confident in the company’s continued success,” said Axel Steinman, Vice President for Emerging Markets, Microsoft Advertising. “Our strategic partnership agreement will see the continuation of our strong relationship with Mi9 and NEC well into the future,” he said.
Gyngell added: “I’m pleased to confirm that Mark Britt will continue as CEO of Mi9. Mark is a talented leader who has overseen the transformation of Mi9’s offering to make it one of Australia’s leading digital companies with its own distinct culture. His commitment to Mi9’s people and values has also positioned the company as an employer of choice. As we move into this next phase for Mi9, I’m delighted that Mark will continue to lead the business into the future.”
“ninemsn and Mi9 have been a critical part of NEC’s digital business for many years. With the continued convergence of TV and digital, I’m incredibly excited to be able to be able to leverage NEC’s extraordinary entertainment offering and our continued relationship with Microsoft to be the digital partner of choice for our users and clients,” said Mark Britt, CEO Mi9. “This is an exciting time for us at Mi9. NEC has always been a fantastic shareholder, so this is business as usual for us. Our commitment to our audience, users, advertisers and employees remains the same.”
The other major technology/media tie-up in Australia is Yahoo!7, which operates as the Australian division of global technology giant Yahoo!, but also utilising the assets of television channel Seven.
Frankly, it’s about time Microsoft got out of ninemsn/Mi9. The joint partnership here was always a legacy from the dot com years when technology giants like Microsoft were looking to partner with media giants like PBL to conquer the Internet. With Mi9 only likely to ever experience modest revenue growth in Australia, or revenue at all, (not the high levels of growth and revenue a giant tech firm like Microsoft typically looks for from its divisions), and with Microsoft largely getting out of media per se and focusing more purely on its role as a technology and gaming company, there just doesn’t seem any reason for it to continue to hold a stake in ninemsn.
After all, it’s not as if the new Nine-owned Mi9 will not want to continue its advertising relationship with Microsoft, regardless of who owns it. Ninemsn has always been substantially dependent on redirections from giant Microsoft sites like Hotmail to make up large chunks of its site traffic, and that’s unlikely to change any time soon.
This is a good deal for everyone concerned. Microsoft gets out of a slow-moving media business, with a modest return on its long-term investment, while still having a major media partner to sell local ads through its global properties. Nine gets more control over the whole situation and may be able to leverage its existing content through ninemsn better. And as for ninemsn’s staff? Well, as Mi9 chief Mark Britt told Mumbrella today … “I go from having eight bosses to having one”.
Image credit: Microsoft