MSBN: A New Way to Part Microsoft From Its Money

Microsoft Corp. (Nasdaq: MSFT) is investing megamillions in Barnes & Noble Inc.'s (NYSE: BKS) Nook Division, expanding the battle with Amazon.com Inc. (Nasdaq: AMZN) and Apple Inc. (Nasdaq: AAPL) for dominance in the electronic publishing field. Barnes & Noble stockholders are dancing in the bookstore aisles.

As much as I favor competition, I hope it works out for the Windows people. I still remember the last time they threw their weight around in an emerging media technology field.

MSNBC was a new, interactive 24-hour news talk and information network, a joint venture announced in December 1995 by NBC News, then owned solely by General Electric Co. (NYSE: GE), and Microsoft, owned by Bill Gates, who Forbes magazine had fingered at the time as the richest man in the known world (net worth $18 billion or so).

The way the collaboration was supposed to work: Each partner would invest $250 million. Via the Internet, MSNBC linked Microsoft Interactive’s technological wizards in Redmond, Wash., with MSNBC Cable’s inactives at the time in Fort Lee, N.J.

The initiative, according to the ads, was the start of the golden age of media news information culture. It would revolutionize the future of cable news.

As I gathered, the idea was that people would start watching the news on their TV screens, and then turn their backs on their sets and start fiddling with their computers. Every 15 minutes or so, in the original Bill Gates business plan, there would be an announcement on the screen reminding viewers to go to their computers for more news.

It sounded like a bad marriage, in the sense that you had a passive sport, which was watching TV, and an active sport, which was playing with the computer. They were trying to merge two cultures into one, which was a risky business plan back in 1996.

The so-called interactive network of the future had a lot of promise when it began in the summer of 1996. After six months of intense promotion and furious hype, most people still might have believed MSNBC was something you put in Chinese food. If you sprinkle MSNBC on your food, you get a headache.

I didn’t understand what all the excitement was about. What I saw on the screen was a couple of lower echelon CNBC–type anchors sitting behind tacky little desks like bridge tables and chairs rented from a Route 22 used furniture warehouse, doing the cheesiest network news show ever seen. I was more excited about Windows 95, even though I didn’t own a computer at the time.

By 2002, when the experiment was relaunched with the usual Second Coming enthusiasm, people were still yawning over the future of cable news. It remained a solid third place in the ratings (behind Time Warner Inc. (NYSE: TWX)'s CNN and News Corp. (NYSE: NWS)'s Fox News).

The revolutionary news information creature was actually NBC’s way of redoing America’s Talking, its successful cable network that was TV’s first news talk infotainment network, predating Fox News. It was folding America’s Talking and making it vanish into MSNBC, with $250 million of Bill Gates's money.

NBC should have left America's Talking on, explained Roger Ailes, who had created it before quitting and going to work for Rupert Murdoch to invent Fox News. As he says, "I did America’s Talking for $35 million a year. The second I left, they turned it over to MSNBC, and added $350 million. And it was still a failure. If they had just left me alone, and given me another $50 million, I would have created a new channel for them and there wouldn’t be Fox News today. And they would own 100 percent of it."

No, they preferred taking Microsoft’s money, Ailes explained, adding, “It was hard to resist taking advantage of a guy from Seattle who shows up in New York with a wallet bigger than his head.”

The network that was created not for the audience so much as for the needs of Jack Welch, the GE CEO who engineered the deal to lift $250 million out of the pockets of Bill Gates, is now -- after 16 years -- sometimes finishing second in the cable network news race. And at least people no longer think MSNBC is something that you find in Chinese food and gives you a headache.