Industry rumours were triggered by a private client report issued by financial services group HSBC Securities to Australian media conglomerate Publishing and Broadcasting Limited PBL which suggested a recent 20 per cent drop in ecorp’s share price could be “related to the possibility of Microsoft splitting from ninemsn.” ecorp is the Internet arm of PBL.
The report attributed Microsoft’s possible move as part of the company’s shift away from content in favour of broadband e-commerce.
Executives at ninemsn have dismissed rumours by saying that Microsoft would not dispense with as valuable an alliance as ninemsn.
The portal combines content from Microsoft with PBL’s Channel Nine television network and its magazines, and regularly attracts large volumes of traffic, particularly following prompts on television programs.
According to the original terms of the venture, Microsoft and ecorp will each invest AUS$50 million (US$32 million) into ninemsn over the next three years. As a result of sponsorships, advertising and content deals, the site is expected to turn a profit by the end of its third financial year in 2001/02.
ecorp executive chairman Daniel Petre has sought to diffuse the speculation by maintaining that Microsoft has done better through this joint venture than it would have done if it had developed an Australian portal on its own.
Microsoft has similarly said that it has no interest in leaving ninemsn, and has added weight to this claim by relocating Adam Taylor from the US-based Microsoft Corp. to head Microsoft Australia’s Consumer Content Group. This department will continue to oversee the ecorp joint venture, including WebTV technology and consumer Internet products.