• by Kate Kaye , June 30, 2004

(Editor's Note: The second paragraph of this story corrects an earlier version which stated that MSN's ad sales team is solely responsible for selling ads on FoxSports.msn.com).

Today Microsoft Corp.'s MSN says "bye-bye" to sports content from ESPN as it takes the wraps off a new co-branded sports content deal with FoxSports.com. Now live, the FoxSports.msn.com area of MSN is designed to advance and showcase the online network's focus on leveraging streaming video content.

According to the programming and ad revenue contract between Fox Entertainment Group's FoxSports.com and MSN, Fox will provide exclusive sports content to the portal, as well as video footage from shows like Fox TV's NFL Sunday and pre- and post-game shows. Under a revenue-sharing agreement, MSN will be the exclusive distributor and provider of all ads on the FoxSports.msn.com site, which are being sold jointly by the FoxSports.com and MSN ad sales teams. MSN also has sports content relationships with Major League Baseball and the National Hockey League.

"This gives us a bigger platform with the leading technology player in the world," explains FoxSports.com SVP and GM, Ross Levinsohn. "It's not the old days where we're paying for distribution; this is a partnership through and through."

The network's sports content will be sold through the MSN Video Service; MSN plans to package video ads on behalf of Fox in addition to its partners NBC, CNBC, and MSNBC cable. Ad programs will be sold in conjunction with July's MLB All-Star Game, the NFL season, and National Football Conference Playoffs, as well as the Super Bowl and the Daytona 500, which take place in February 2005.

The deal ends a three-year content partnership between MSN and Walt Disney Co.'s ESPN. While both MSN and ESPN reportedly are focusing more heavily on broadband video, the fact that ESPN does not use MSN's streaming video technology appears to be one reason why the pair parted company. In addition, each media outlet wanted to control its own ad sales inventory. A relationship between ESPN and MSN's Latino channel will remain intact.

For FoxSports.com, the three-year contract with MSN marks the firm's new four-pronged video strategy, according to Levinsohn. The streaming video ramp-up involves free video content on the co-branded FoxSports.msn.com, subscription-based content available on cable operator sites like Comcast; wireless content offerings through current affiliations with Sprint, Verizon, and other carriers; and in the future, subscription video offerings such as streaming games.

Earlier this month, a partnership between Comcast and FoxSports.com was unveiled through which exclusive Fox sports news, editorial, and video content runs on the Comcast.net portal's Sports Channel. Comcast.net subscribers can access Fox Sports video clips and player interviews using Comcast's broadband media player, known as The Fan.

FoxSports.com has been promoting free and pay video content for the past three years. The company's sports content contract with broadband DSL Internet service SBC Yahoo! ends today; a content relationship with RealNetworks also culminated this year.

ESPN topped the Nielsen//NetRatings at-home/at-work sports site chart in May 2004 with 14.6 million unique visitors, representing a 9.58 percent reach of Web users. EBay Sports, Yahoo! Sports, MLB.com, and AOL Sports also ranked in the top five last month. Nielsen//NetRatings reports that FoxSports.com garnered 2.6 million unique visitors in May, reaching less than 2 percent of Web users. According to comScore Networks, Fox Sports Interactive properties had 2.9 million unique visitors in March.

FoxSports.com's Levinsohn believes that the MSN partnership will make Fox a forceful contender in the online sports content arena. "This is an opportunity to grow our entire interactive media platform," he says.

Separately, MSN redesigned the Diet Center section of its Diet and Fitness channel, and will offer advertiser sponsorships on diet hub pages, article pages, and a premier partner page. The publisher distributes content from Lifetime TV, Men's Health, Prevention Magazine, Runner's World, and Outside Magazine in the Diet Center section, new features of which include an expanded Lose Weight section and interactive tools such as a Body Mass Index calculator.

Late yesterday, MSN announced upgrades to its MSN Search service as part of a $100 million investment. The upgrades include a revamped MSN Search home page (http://search.msn.com), a refreshed look for the search results page that separates alogorithmic results from paid results and eliminates paid inclusion. While MSN said that it will continue to monitor the potential for paid inclusion to improve search relevancy, beginning today, links paid for by advertisers will be displayed in shaded boxes that clearly identify them with a "Sponsored Sites" heading. The goal of such identification, MSN says, is to enable consumers to clearly choose between algorithmic results and sponsored links.

MSN has said it will deliver a new algorithmic search engine and a variety of other search services within the next year. MSN attracts more than 350 million unique users worldwide per month.

Tobi Elkin contributed to this report.