Dec. 19 (Bloomberg) -- Viacom Inc., owner of the MTV and Comedy Central cable networks, chose Microsoft Corp. to sell advertising on its U.S. Web sites in a $500 million partnership that replaces an ad agreement with DoubleClick Inc.

DoubleClick is losing the contract as it prepares to be bought by Google Inc., Microsoft's larger competitor in online ads. Under the five-year agreement, Microsoft will be able to show Viacom television shows and movies on its MSN site.

Kevin Johnson, president of Microsoft's platforms and services unit, approached Viacom Chief Executive Officer Philippe Dauman in New York in September to win the business for aQuantive Inc., a DoubleClick competitor bought by Microsoft in August. For Viacom, the deal furthers an effort to get shows and movies onto the Internet and mobile phones.

``Viacom doesn't have the Internet breadth and depth Microsoft has and never will, and Microsoft doesn't have the content Viacom has and probably never will,'' Fred Moran, an analyst with Stanford Group in Boca Raton, Florida, said in an interview. ``This partnership makes them more competitive.''

Moran recommends buying Viacom shares and doesn't own them.

Viacom's Class B shares rose 25 cents to $43.32 at 4:05 p.m. in New York Stock Exchange composite trading. Microsoft, the world's largest software maker, rose 5 cents to $34.79 in Nasdaq Stock Market trading.

September Meeting

Microsoft impressed Viacom with its ability to sell ads for video games, mobile phones and Internet TV as well as Web sites, Johnson said in an interview. He said he planned a 30-minute meeting in September at Dauman's office in New York that wound up two hours later with the framework for the partnership.

Under the deal, programming from Viacom's MTV, Comedy Central, Nickelodeon and BET cable networks as well as the Paramount studio will be distributed on MSN and Microsoft's Xbox 360 video-game system.

Microsoft, based in Redmond, Washington, will have the exclusive right to seek buyers for unsold display advertising space on Viacom's U.S. sites. The companies will share ad revenue. Microsoft also agreed to buy ads on Viacom's cable-TV networks and its online sites for five years.

Viacom had been using DoubleClick to manage online advertising and sell some of its unsold, or remnant, ads, said Kelly McAndrew, a spokeswoman for Viacom.

The $500 million value for the partnership, which includes ad spending by Microsoft, the sale of ad space on Viacom sites and licensing fees, may increase over time, Dauman said.

Viacom is suing video Web site YouTube, another unit of Google, for violating copyrights in using Viacom content without permission. McAndrew said the suit has nothing to do with the switch to Microsoft.

-- With reporting by Dina Bass in Seattle. Editors: Cécile Daurat, Anthony Palazzo

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

Last Updated: December 19, 2007 16:15 EST