Viacom and Microsoft Announce Long-Term Digital Content and Advertising Partnership

Companies sign landmark multiyear deal to collaborate on content distribution, advertising, event promotions and gaming; Microsoft’s Atlas to become exclusive ad serving platform for Viacom U.S. Web sites.

NEW YORK and REDMOND, Wash. — Viacom Inc. (NYSE: VIA and VIA.B) and Microsoft Corp. today announced a broad-based, strategic alliance under which major divisions of both companies will collaborate on advertising, content distribution, event promotions and games over the next several years.

The comprehensive agreement spans across the two companies and includes a number of significant components. Among them:
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Microsoft will license, on a non-exclusive basis, long- and short-form television and theatrical content from across Viacom’s cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures, for use on Microsoft properties such as MSN and Xbox 360.
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Microsoft’s Atlas division will become the ad server for Viacom’s U.S. Web sites and Microsoft will have the exclusive right to sell remnant display advertising inventory on Viacom’s U.S. Web sites.
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Microsoft will buy advertising on Viacom broadcast and online networks over a five-year period and the companies will work together on promotions and sponsorships for MTV Networks and BET Networks award shows.
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Viacom will work with Microsoft on opportunities to become a preferred publishing partner across Microsoft’s casual gaming platforms.

Detailed financial terms were not disclosed, but the deal has a projected base value of approximately $500 million in financial considerations and business services between the two companies over the initial five-year length of the agreement. The deal includes a combination of revenue sharing provisions, guarantees and content licensing agreements. The agreements contemplate the potential for expansion of the transactions.

Philippe Dauman, president and chief executive officer of Viacom, said, “We are very impressed with how closely Microsoft’s business plans complement our strategic objectives. This is a novel and comprehensive partnership that demonstrates the scale of our digital operation and the value of our branded content across all distribution platforms. By taking advantage of industry-leading assets at both our companies, this landmark alliance brings valuable promotional power and increased monetization to our wide portfolio of branded Web sites, which collectively represent the leading entertainment presence online. Microsoft’s superior assets and expertise in the ad serving and sales business will drive enhanced value to our digital operations.”

Dauman added, “We look forward to collaborating closely with Microsoft as we move forward. This partnership will generate significant value on both sides. This deal is an important example of how the growing success of our digital properties is driving greater revenue for Viacom as a whole.”

Kevin Johnson, president of Microsoft’s Platforms & Services Division, said, “We are delighted to establish this long-term partnership with Viacom. Viacom’s portfolio of original content and strong consumer brand connections are a terrific complement to Microsoft’s Web, gaming and digital advertising assets. This deal is another milestone in our quest to build a world-class advertising platform to serve the broad needs of advertisers and publishers. If ever there was a ‘win-win’ partnership across two companies, this is it.”

Content Distribution

Viacom will provide Microsoft with a broad selection of short-form and long-form audio-visual content from MTV Networks, Paramount and BET Networks for distribution by Microsoft on MSN.com and Xbox 360. A wide range of content from Viacom properties is already distributed to Xbox 360 users through Xbox LIVE Marketplace and this deal adds popular content from BET Networks. In addition, Viacom will work with Microsoft’s casual gaming platforms (MSN, Windows and Xbox) to provide downloadable casual games to the substantial base of consumers playing quick-to-develop, easy-to-learn games on these platforms.

Ad Serving

Microsoft will provide Viacom with its proprietary ad serving solution, known as Atlas AdManager. AdManager is an offering that Microsoft obtained upon completion of its $6 billion acquisition of aQuantive Inc. in August 2007. AdManager — which operates within Microsoft’s newly created Advertiser & Publisher Solutions Group — will enable Viacom to better monetize its U.S. Web properties, such as MTV, VH1 and Comedy Central, by serving graphical and video ads on those sites, providing an ad serving solution, optimization features, inventory forecasting, real-time reporting and precise audience advertising targeting.

Ad Syndication

Viacom will provide unsold display advertising inventory on its digital sites for Microsoft to sell and serve through both Microsoft Digital Advertising Solutions and DRIVEpm. Revenue generated from the sale of this inventory by Microsoft will be shared between the two companies.

Events and Promotions

During calendar year 2008, Microsoft and Viacom will partner to promote a co-branded Web site with exclusive content from at least four MTV Networks and BET Networks events, such as the MTV Video Music Awards and BET Awards, and will share certain advertising revenue generated by the site. Microsoft will provide a pre-determined amount of online promotion for each event.

About Microsoft Advertiser & Publisher Solutions

Microsoft Advertiser & Publisher Solutions (APS) provides world-class advertising platforms and tools for advertisers, agencies and publishers. Its mission is to make buying and selling media simpler, smarter and more cost-effective across media and devices in the Microsoft network of properties and beyond. The APS portfolio includes Microsoft adCenter, Atlas, DRIVEpm, Massive and ScreenTonic. APS businesses span search, display and emerging media including mobile, gaming, video on demand and IPTV. More information can be found at http://advertising.microsoft.com.

About Viacom

Viacom, consisting of BET Networks, MTV Networks and Paramount Pictures, is the world’s leading entertainment content company. It engages audiences on television, motion picture and digital platforms through many of the world’s best known entertainment brands, including MTV, VH1, CMT, Logo, Harmonix, Nickelodeon, Noggin, Nick at Nite, AddictingGames, Neopets, COMEDY CENTRAL, Spike TV, TV Land, Gametrailers, BET, Paramount Pictures, DreamWorks and Paramount Vantage. Viacom’s global reach includes approximately 145 channels and 300 online properties in 160 countries and territories.

For more information about Viacom and its businesses, visit http://www.viacom.com.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.