Viacom & Microsoft Announce Major Content, Ads Deal

Today Microsoft and Viacom announced a wide-ranging content and advertising deal that involves Viacom content distribution on Microsoft-owned sites, ad serving by Microsoft on Viacom properties, mutual distribution of game-related content and ads, as well as collaboration in other areas. Perhaps the most interesting aspect of the announcement are apparent guarantees of Microsoft advertising on Viacom TV properties and online.

The release lays out the full scope of the partnership, said to be worth $500 million over five years.

Viacom famously and very publicly had a falling out with Google over YouTube distribution of its content and went on to file a lawsuit earlier this year against the search engine for copyright infringement. That suit is still pending and seeks more than $1 billion in damages against Google.

In that context, this partnership has the quality of “the enemy of my enemy is my friend.” However, both companies have mutual, self-interested reasons for doing the deal: Microsoft gets valuable and popular video content (e.g., The Daily Show), becomes Viacom’s exclusive ad serving partner for Viacom’s US inventory, and gets to sell ad space on Viacom sites not directly sold by Viacom. In turn, Viacom gets a way to monetize unsold ad inventory, although the company could have done that with any number of ad network partners. It appears that the real coup here for Viacom is the fact that Microsoft will buy airtime on Viacom TV networks and inventory on Viacom sites:

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.

While these are not revenue guarantees per se, they do represent payments from Microsoft to Viacom over five years. (However, they’re nothing like the ad revenue guarantees Google provided to MySpace.) And, of course, Microsoft gets brand and product exposure for its money. Beyond this, the relationship adds another high-value, marquee partner to Microsoft’s stable of ad distribution relationships, which include Facebook, Digg, and CNBC.com. Somewhat ironically, perhaps, most of these properties have a younger audience bias.

There’s more discussion on Techmeme.