Microsoft, Viacom ink $500 million ad deal

As part of a wide-ranging deal announced Wednesday, Microsoft has licensed TV and movie content from Viacom, which in turn will let Redmond serve up ads on its U.S. Web sites.

The arrangement means that Viacom will use Microsoft's Atlas technology to deliver ads to those sites. Microsoft acquired Atlas as part of its $6 billion Aquantive purchase. Additionally, Microsoft will have the exclusive right to market Viacom's unsold display advertising space.

Microsoft, meanwhile, will be able to put shows from MTV and Comedy Central and movies from Paramount Pictures onto various products, such as MSN and Xbox, the companies said in a statement. Microsoft already distributes some Viacom content though its Xbox Live Marketplace.

The two companies did not disclose the financial terms of the deal, but said more than $500 million worth of stuff is to go back and forth under the five-year arrangement. "This is a novel and comprehensive partnership that demonstrates the scale of our digital operation and the value of our branded content across all distribution platforms," Viacom CEO Philippe Dauman said in a statement.

Kevin Johnson, president of Microsoft's Platforms and Services Division, called the deal "another milestone in our quest to build a world-class advertising platform."

The deal does not, however, cover search advertising. Viacom reached a separate deal in April under which Yahoo has the exclusive right to handle search advertising for Viacom's entertainment Web sites.

Viacom had been getting its ads served up by DoubleClick. Google is attempting to buy DoubleClick, and Viacom has a $1 billion copyright infringement suit pending against Google.

Microsoft and Viacom also said they will work together in gaming and to create co-branded Web sites for events such as the MTV Video Music Awards and BET Awards.