INTERVU Inc. Monday announced a strategic partnership with Microsoft Corp. to expand its broadband streaming media network based on the Windows Media platform. As part of the deal, Microsoft will take a $30 million stake in INTERVU.

"INTERVU is a pioneer in distributing streaming media content, and we share a vision of bringing broadband into the mainstream for millions of consumers," said Will Poole, general manager of Microsoft's streaming media division.. "This alliance will significantly advance the quality, broad availability, and efficient delivery of broadband Windows Media content."

INTERVU (ITVU) and Microsoft (MSFT) are teaming to develop an infrastructure that is cost-effective for the development of Internet broadband audio and video delivery.

Content providers will receive forward-based pricing combined with a quick deployment of edge media delivery centers located at high-speed access points. In addition, the Windows Media solution will serve as a platform for building value-added applications such as targeted audio/video advertising insertion, pay-per-view, and digital rights management, creating new business opportunities for content providers.

"Our strategic alliance with Microsoft is a strong endorsement of INTERVU's strategy to build the most advanced broadband network dedicated to multimedia content," said Harry Gruber, chairman and chief executive officer of INTERVU.

"We will use this investment to expand our broadband network capabilities and develop value-added applications to provide our customers with an end-to-end solution for streaming media management and delivery at a price designed to jump start the broadband streaming media industry."

With Microsoft's investment, INTERVU will co-locate and interconnect its infrastructure with cable, wireless and digital subscriber line networks and in other "edge" locations in order to reduce, and eventually eliminate, egress distribution costs for its content provider customers. This regional expansion of INTERVU's network will also offer broadband service providers and their subscribers with the highest quality audio/video experience possible by bypassing Internet congestion through intelligent network delivery.

Microsoft plans to purchase shares of a new series of INTERVU preferred stock for $30 million. The preferred stock may be converted into common stock at a conversion price of $90.00 per share, which represents a 27 percent premium over the previous 20-day average closing price of INTERVU's common stock. The terms of the security specify an annual dividend rate of 6.5% payable quarterly in stock or cash. Microsoft will receive a five-year warrant to purchase 60,000 shares of INTERVU's common stock with an exercise price of $90 per share.