• by May 7, 2004

Sports content from Fox Sports, a unit of Fox Entertainment Group, will appear on Microsoft Corp.'s MSN on July 1 under the terms of a new programming and ad revenue agreement between the network and the software giant. The new partnership marks the end of MSN's relationship with Walt Disney Co.'s ESPN, which has provided sports content to the Internet network since September 2001.

ESPN content will continue to appear on the MSN network through June 30. The two-year deal with MSN technically ended last September. "We were all reasonably happy, and we've gone longer, but at the end of the day, there was no compelling reason to continue [the] deal we had, so we're winding down," said John Skipper, executive vice president, ESPN.

ESPN.com regularly racks up some 17 million unique visitors per month; it is the number one sports destination on the Web. "Our original motivation was to solidify our number one spot; this deal helped us do that," Skipper notes, adding: "They did in our deal what they said they would do."

"ESPN has been a great partner of ours, and MSN really helped them get to their leadership position," said Karen Redetzki, MSN product manager, who said that MSN will continue to work with ESPN via its Latino channel.

MSN's deal with Fox Sports gives MSN exclusive sports content and access to video footage from popular shows, including Fox TV's NFL Sunday. MSN's ad sales force will sell the Fox inventory under a revenue-sharing deal, the terms of which MSN declined to specify. "We'll also be working with the Fox broadcast folks to create integrated packages," she said.

MSN will also create integrated ad packages that include the 2004 National League Football season, the Major League Baseball All Star Game, and the 2005 Daytona 500 Nascar auto race. MSN will also create streaming video advertising opportunities.

The decision by MSN and ESPN not to renew their sports content deal is believed to have hinged on the fact that both entities are aggressively pursuing broadband video strategies, and want to control their own ad sales inventories. ESPN's ESPNMotion streaming video product has been a hit with advertisers, and ESPN.com is in the process of positioning Motion to advertisers in conjunction with the broadcast network and cable upfronts. "We are going into the upfront(s) with a specified amount of inventory, and we expect to sell it all," Skipper said.

In January, MSN launched the MSN Video Service with advertisers including Revlon and Procter & Gamble. It is a free streaming service offering customizable video clips. ESPN doesn't use the MSN Video technology. Per the terms of the new deal, MSN will sell the Fox sports content on the MSN Video Service. MSN is currently in the process of positioning its broadband video opportunities to advertisers, and expects to work with Fox--as well as its partners NBC, CNBC, and MSNBC cable--to package them for the upfronts. MSN will also work with Fox Sports to redesign and streamline the advertising elements of FoxSports.com.

Visitors to FoxSports.com increased by 82 percent since July 2003, according to Nielsen//NetRatings. Fox Sports Interactive properties logged 2.9 million unique visitors in March, according to comScore Networks. For the quarter ending March 31, Microsoft's MSN unit posted $107 million in profit on sales of $591 million.