Even as NBC was dismantling its Internet portal initiative earlier this month, it was quietly assembling a new plan that it will unveil this week.
Part one in the revamped approach will be another joint venture with Microsoft: a 10-year agreement that will merge finance site CNBC.com and MSN MoneyCentral. The new site will be called CNBC MoneyCentral.
Part two will most likely involve the entertainment assets of NBC.com, but details have yet to be ironed out.
The new plans follow the painful disintegration of NBC's ambitious online initiative, which cost it more than $100 million in on-air promotions given to portal NBCi. Earlier this month, the Peacock Network shelled out an additional $85 million for the outstanding NBCi stock and began dismantling its site.
Its new approach stems from a hard lesson that NBC execs learned in the NBCi debacle: Stick with what you know. For NBC, that means providing content and doing the marketing. From now on, NBC officials say, they will partner with technology firms when it comes to the Web. "We're not going to get there by ourselves," said Marty Yudkovitz, president of NBC Digital Media and who negotiated the new deal with the Redmond software giant. "Microsoft isn't going to get there by itself – it just naturally fits."
If any of this sounds familiar, it should. It's just an updated version of the approach NBC took in 1996, when it hooked up with Microsoft to create the cable and Internet news operation MSNBC. In its bid to cast itself as an Internet giant in the mid-1990s, Microsoft desperately needed content for its fledgling portal MSN. At the other end, NBC wanted to expand its cable franchise and go up against CNN. And then there was this new thing called the Internet. They became natural partners as each side was looking to the other for what each lacked: content and technology.
The marriage also created NBC's longest-lasting foray online — MSNBC.com. Amid declining ad revenues and the near evaporation of the online advertising market, the site is by some measures a success. It draws 10 million unique visitors a month and has ranked No. 1 among news sites in all of 2000. Although it's still in the red, it has yet to resort to layoffs, as most other online news operations have done. And for NBC, the site is a bargain: Microsoft pays for the site's operating expenses but splits the revenues with NBC.
But instead of exploring other opportunities with Microsoft, NBC decided to go it alone on the Internet. Competitors such as CBS and Disney were building their own Internet empires, and the race was on to get online. The network focused on competing against Microsoft, Yahoo and America Online by creating NBCi by 1998. The MSNBC philosophy suddenly took a backseat. "The relationship with Microsoft was always kept in second gear," admits Yudkovitz, who was one of the original architects of the MSNBC deal.
And despite the recent losses on the Internet, the stakes are even higher now. While the landscape has changed beyond recognition from 1996, what hasn't changed is the basic economics of building successful, relatively inexpensive media operations. It's no secret that every major media company is bracing against the impact of the new 800-pound media and technology gorilla that is AOL Time Warner. But GE is hamstrung from selling NBC — despite persistent rumors that it may do so — as it quietly waits for its acquisition of high-tech conglomerate Honeywell to pass regulatory hurdles.
That's where the CNBC-Microsoft deal comes in. NBC believes that it can cast itself niche by niche into an entity like AOL TW, albeit on less of a grand scale.
In some respects, the combination of the two finance sites represents a concession of defeat for CNBC.com, which has lost out to category leader Yahoo Finance and CBS MarketWatch in the battle to become
