Microsoft and Viacom today announced a multiyear content and advertising partnership. Under the deal, Microsoft will become the exclusive seller of remnant display ads on Viacom’s Web sites. In addition, Microsoft will use technology from aQuantive, which it recently bought, to serve ads on Viacom’s Web sites; it will buy ads on Viacom’s online and broadcast networks; and it will license Viacom content, on a nonexclusive basis, for use on outlets like MSN and the Xbox 360.
These kinds of online advertising and distribution deals have become important markers, especially when they involve major companies and have large dollar figures attached to them. Microsoft and Viacom are certainly major companies, and while they didn’t disclose detailed financial terms, the companies pegged the “base value” of the deal at approximately $500 million over five years.
That Viacom teamed up with Microsoft is not surprising. Viacom, the parent company of MTV, Comedy Central and Nickelodeon, is locked in a $1 billion copyright infringement suit against Google over video clips owned by Viacom that have appeared without authorization on YouTube. Google is in the process of acquiring DoubleClick, which Viacom was using to serve ads on its site.
Google wasted no time in putting its own spin on the deal. Noting that Microsoft had argued before Congress and federal regulators that Google’s proposed acquisition of DoubleClick would reduce competition in online advertising and should be blocked, Google said in a statement: “We have argued all along that the online advertising space is highly competitive and that there are no barriers to switching. While some have apparently argued otherwise, today’s announcement would seem to suggest that those arguments are flawed.”
The Federal Trade Commission, which is reviewing the $3.1 billion deal, could issue a ruling as early as this week. Most observers expect that the agency will approve it. Even if the F.T.C. gives it a green light, Google will not be able to complete the deal until European regulators finish their review, a process that could take until April.
This is not the first time Viacom has teamed up with a Google rival. In April, Yahoo became the seller of search and contextual text ads on Viacom’s sites.