Microsoft lands Viacom advertising, content deal

By Kenneth Li

NEW YORK (Reuters) - Microsoft Corp won an estimated $500 million, 5-year Internet advertising deal with MTV Networks owner Viacom Inc, giving the software giant a boost against rivals Google Inc and Yahoo Inc.

Microsoft will help Viacom place advertising on its network of entertainment Web sites in the U.S., such as MTV.com. Microsoft will also be the exclusive seller in the U.S. of remnant display advertising, which is ad space that Viacom has been unable to sell, company executives said on Wednesday.

The deal replaces online ad firm DoubleClick, whose services Viacom currently employs among other partners. Google, which Viacom sued for $1 billion for copyright infringement, is set to purchase DoubleClick for $3.1 billion.

The broad agreement involves Viacom's online games, television shows and films. Microsoft will license long- and short-form television and movies from Viacom for Microsoft's MSN Internet network and its Xbox 360 game system's online network.

The deal is seen as a coup for Microsoft's Atlas advertising platform as it makes inroads against Google Inc and Yahoo Inc in the overall online advertising business, which Microsoft has estimated at $80 billion by 2010.

Each company has raced to purchase new advertising businesses and lock in exclusive agreements.

Yahoo signed a deal in April with Viacom to provide search advertising for 33 of its Web sites, which remains in place. Viacom's properties include the Paramount movie studio, and MTV and Comedy Central cable television networks.

Redmond, Washington-based Microsoft in August made its biggest purchase ever in the $6 billion acquisition of digital ad firm aQuantive in an effort to transform into one of the Web's top two players in the online ad market in three to five years.