Earlier we noted that the description of Microsoft (MSFT) and Viacom’s (VIAB) $500 million deal sounded a bit like Google’s three-year, $900 million deal with News Corp. and MySpace, but wasn’t. Why? Because Microsoft didn’t say that it was paying Viacom any particular amount. Instead the two sides only said that “the deal has a projected base value of approximately $500 million [emphasis added] in financial considerations and business services between the two companies over the initial five-year length of the agreement.”
So you can see why were were a bit nonplussed by the whole deal. So was CNBC’s David Faber, but at least he managed to extract a bit of information from Microsoft exec Kevin Johnson during an interview this morning:
Faber: Mr. Johnson, how much are you paying to Viacom to get this business?
Johnson: Well, certainly we’ve described this overall relationship over the next five years in the order of magnitude of around $500 million. That includes a lot of components of it.
Faber: But you’re paying the money as well. You’re actually giving them a payment. I know it is not disclosed but it eventually will be. Are you paying them separately from that $500 million number?
Johnson: In that $500 million, it includes advertising that we buy from Viacom, includes the guarantees they have for ad impressions, it certainly is a significant deal.
So to sum up: Over five years, Microsoft has guaranteed to pay Viacom some amount of money, which is less than $500 million, for some amount of ad impressions. Clear enough for you? No, not for us, either.
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