Microsoft Makes Another Interactive TV Investment

The New York Times
January 24, 2000, Monday, Late Edition - Final

BYLINE: By ANDREW POLLACK
In another step toward extending its reach from the personal computer to the television set, the Microsoft Corporation will invest $56 million in Intertainer Inc., a privately held company that provides a video-on-demand service, Microsoft executives said.

The deal, which was expected to be formally announced Monday, would give Microsoft a stake of slightly more than 20 percent in Intertainer, making it the largest single shareholder.

The investment would allow Intertainer, which is based in Culver City, Calif., to more quickly introduce its service, which offers pay-per-view movies, music, television programs and electronic shopping to personal computers connected to cable modems, high-speed digital telephone lines or television sets with digital set-top boxes. The company has started offering its service commercially in some cities, but has fewer than 1,000 subscribers so far.

Microsoft is trying to position itself as a leading software provider for interactive television.

"We're trying to make this whole marketplace come true," Jon DeVaan, senior vice president for Microsoft's consumer group, said Friday. The investment in Intertainer, he said, would give Microsoft "an innovative broadband service committed to using its platform."

He said that Microsoft also hopes to work with similar services. Microsoft agreed in May to invest $5 billion in AT&T in exchange for a promise that the company, which owns the cable systems of the former Tele-Communications Inc., would use Microsoft software in 7.5 million to 10 million digital set-top cable boxes.

Microsoft also bought an 11 percent stake in the Comcast Corporation, a cable company, several years ago and acquired Web TV, a company that allows Web surfing using a television set.

Intertainer was formed in 1996 by Jonathan Taplin and Richard Baskin, longtime Hollywood executives. It has received smaller investments from Comcast, the Intel Corporation, NBC, and US West.

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