Expedia Stake Sold to USA Networks

Microsoft has agreed to sell its controlling stake in the Expedia online travel service to USA Networks. The sale continues Microsoft’s movement away from maintaining its own Web content and e-commerce properties, and gives it a chance to unload Expedia while the stock is riding high but the service itself faces increasingly stiff competition. It also gives Microsoft a stake in USA Networks, a potential content partner that operates several major cable TV channels and other online properties.

Originally created by Microsoft as part of MSN, Expedia will continue to be MSN’s preferred travel site for at least four years. USA Networks will pay for Microsoft’s 33.7 million shares of Expedia with a mixture of securities (including its own stock) and will also purchase up to 3.8 million additional Expedia shares currently on the open market. USA Networks will gain control of between 67% and 75% of Expedia, and Microsoft will own between 3% and 5% of USA Networks.

Why Expedia Was Sold

The sale reflects Microsoft’s current lukewarm attitude toward Web content, most clearly exhibited when Steve Ballmer told Reuters in a June interview, “If we were starting (MSNBC) now, as good an operation as it is, I don’t think we would have started it.” Microsoft already sold part of Expedia in a 1999 IPO, and it has spun off or sold other Web properties such as city guide Sidewalk (which USA Networks bought and integrated into its CitySearch site) and automotive information site CarPoint.