Network Meets Net

Why would Microsoft Corp., happily cranking out profits in its core business, be willing to put up more than $500 million to join NBC's plunge into the soon-to-be crowded cable news business? How could the software giant hope to see a payback, when ABC News scrapped a cable network rather than risk $800 million getting caught in the coming brawl between the incumbent giant, CNN, and its challengers?

It's simple, says Patricia Q. Stonesifer, senior vice-president of Microsoft's Interactive Media Div.: "Microsoft has always tried to drive the number of dollars per PC." By investing heavily in multimedia CD-ROMs, for example, the company built up in a few years a new $400 million-a-year business. Likewise, MSNBC, which will debut with much fanfare on July 15, has the potential to generate new revenue from PC owners by bringing together the promotional clout of a major network, a new cable channel, and a companion Web site. Online services, including interactive news, look like another winner, says Stonesifer.