Mutual back scratching deal worth $500m

Microsoft and Viacom have signed a deal to collaborate on advertising, content distribution, event promotions and games over the next several years.

As part of the agreement Microsoft will get non-exclusive access to content from across Viacom's cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures.

The content is likely to find its way onto Microsoft properties such as MSN and Xbox 360.

Microsoft's Atlas division will become the ad server for Viacom's US websites, and the software giant will sell remnant display advertising inventory on its new partner's sites.

Microsoft will also buy advertising on Viacom broadcast and online networks over the course of the five-year agreement, and both companies will cooperate on promotions and sponsorships for MTV Networks and BET Networks award shows.

The deal has a projected value of approximately $500m in financial considerations and business services between the two companies.

"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," said Philippe Dauman, president and chief executive at Viacom.

"Microsoft's superior assets and expertise in the ad serving and sales business will drive enhanced value to our digital operations."