Viacom Inc. and Microsoft Corp. today announced a broad-based, strategic alliance under which major divisions of both companies will collaborate on advertising, content distribution, event promotions and games over the next several years.

The comprehensive agreement spans across the two companies and includes a number of significant components. Among them:
• Microsoft will license, on a non-exclusive basis, long- and short-form television and theatrical content from across Viacom’s cable network and motion picture businesses, including MTV, Comedy Central, BET and Paramount Pictures, for use on Microsoft properties such as MSN and Xbox 360.
• Microsoft’s Atlas division will become the ad server for Viacom’s U.S. Web sites and Microsoft will have the exclusive right to sell remnant display advertising inventory on Viacom’s U.S. Web sites.
• Microsoft will buy advertising on Viacom broadcast and online networks over a five-year period and the companies will work together on promotions and sponsorships for MTV Networks and BET Networks award shows.
• Viacom will work with Microsoft on opportunities to become a preferred publishing partner across Microsoft’s casual gaming platforms.

Detailed financial terms were not disclosed, but the deal has a projected base value of approximately $500 million in financial considerations and business services between the two companies over the initial five-year length of the agreement. The deal includes a combination of revenue sharing provisions, guarantees and content licensing agreements. The agreements contemplate the potential for expansion of the transactions.

Philippe Dauman, president and chief executive officer of Viacom, said, “We are very impressed with how closely Microsoft’s business plans complement our strategic objectives. 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. By taking advantage of industry-leading assets at both our companies, this landmark alliance brings valuable promotional power and increased monetization to our wide portfolio of branded Web sites, which collectively represent the leading entertainment presence online. Microsoft’s superior assets and expertise in the ad serving and sales business will drive enhanced value to our digital operations.”

Dauman added, “We look forward to collaborating closely with Microsoft as we move forward. This partnership will generate significant value on both sides. This deal is an important example of how the growing success of our digital properties is driving greater revenue for Viacom as a whole.”

Kevin Johnson, president of Microsoft’s Platforms & Services Division, said, “We are delighted to establish this long-term partnership with Viacom. Viacom’s portfolio of original content and strong consumer brand connections are a terrific complement to Microsoft’s Web, gaming and digital advertising assets. This deal is another milestone in our quest to build a world-class advertising platform to serve the broad needs of advertisers and publishers. If ever there was a ‘win-win’ partnership across two companies, this is it.”

Content Distribution

Viacom will provide Microsoft with a broad selection of short-form and long-form audio-visual content from MTV Networks, Paramount and BET Networks for distribution by Microsoft on MSN.com and Xbox 360. A wide range of content from Viacom properties is already distributed to Xbox 360 users through Xbox LIVE Marketplace and this deal adds popular content from BET Networks. In addition, Viacom will work with Microsoft’s casual gaming platforms (MSN, Windows and Xbox) to provide downloadable casual games to the substantial base of consumers playing quick-to-develop, easy-to-learn games on these platforms.

Ad Serving

Microsoft will provide Viacom with its proprietary ad serving solution, known as Atlas AdManager. AdManager is an offering that Microsoft obtained upon completion of its $6 billion acquisition of aQuantive Inc. in August 2007. AdManager — which operates within Microsoft’s newly created Advertiser & Publisher Solutions Group — will enable Viacom to better monetize its U.S. Web properties, such as MTV, VH1 and Comedy Central, by serving graphical and video ads on those sites, providing an ad serving solution, optimization features, inventory forecasting, real-time reporting and precise audience advertising targeting.

Ad Syndication

Viacom will provide unsold display advertising inventory on its digital sites for Microsoft to sell and serve through both Microsoft Digital Advertising Solutions and DRIVEpm. Revenue generated from the sale of this inventory by Microsoft will be shared between the two companies.

Events and Promotions

During calendar year 2008, Microsoft and Viacom will partner to promote a co-branded Web site with exclusive content from at least four MTV Networks and BET Networks events, such as the MTV Video Music Awards and BET Awards, and will share certain advertising revenue generated by the site. Microsoft will provide a pre-determined amount of online promotion for each event.

About Microsoft Advertiser & Publisher Solutions

Microsoft Advertiser & Publisher Solutions (APS) provides world-class advertising platforms and tools for advertisers, agencies and publishers. Its mission is to make buying and selling media simpler, smarter and more cost-effective across media and devices in the Microsoft network of properties and beyond. The APS portfolio includes Microsoft adCenter, Atlas, DRIVEpm, Massive and ScreenTonic. APS businesses span search, display and emerging media including mobile, gaming, video on demand and IPTV. More information can be found at http://advertising.microsoft.com.

About Viacom
Viacom, consisting of BET Networks, MTV Networks and Paramount Pictures, is the world’s leading entertainment content company. It engages audiences on television, motion picture and digital platforms through many of the world’s best known entertainment brands, including MTV, VH1, CMT, Logo, Harmonix, Nickelodeon, Noggin, Nick at Nite, AddictingGames, Neopets, COMEDY CENTRAL, Spike TV, TV Land, Gametrailers, BET, Paramount Pictures, DreamWorks and Paramount Vantage. Viacom’s global reach includes approximately 145 channels and 300 online properties in 160 countries and territories.

About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Activision, Inc. and Vivendi today announced that they have signed a definitive agreement to combine Vivendi Games, Vivendi’s interactive entertainment business — which includes Blizzard Entertainment’s World of Warcraft®, the world’s #1 multi-player online role-playing game franchise — with Activision, creating the world’s largest pure-play online and console game publisher. The new company, Activision Blizzard, is expected to have approximately $3.8 billion in pro forma combined calendar 2007 revenues and the highest operating margins of any major third-party video game publisher. On closing of the transaction, Activision will be renamed Activision Blizzard and will continue to operate as a public company traded on NASDAQ under the ticker ATVI.

Activision, one of the world’s leading independent publishers of interactive entertainment, is best known for its top- selling franchises, including Guitar Hero®, Call of Duty® and the Tony Hawk series, as well as Spider- Man™, X-Men™, Shrek®, James Bond™ and TRANSFORMERS™. Blizzard Entertainment, a division of Vivendi Games, has projected calendar 2007 revenues of $1.1 billion, operating margins of over 40% and approximately $520 million of operating profit. Blizzard owns the #1 multi-player online role-playing game franchise, World of Warcraft, which currently has over 9.3 million subscribers worldwide. Blizzard’s World of Warcraft, Warcraft®, StarCraft® and Diablo® games account for four of the top-five best-selling PC game titles of all time. Vivendi Games also owns popular franchises, including Crash Bandicoot™ and Spyro™. Pro forma for calendar 2007, Activision Blizzard expects to generate approximately 70% of its revenues from owned franchises. As a result of the business combination, Activision Blizzard expects to have the most diversified and broadest portfolio of interactive entertainment assets in its industry, positioning the combined company to capitalize on the continued worldwide growth in interactive entertainment.
Jean-Bernard Lévy, Chairman of the Management Board and Chief Executive Officer of Vivendi stated: “This alliance is a major strategic step for Vivendi and is another illustration of our drive to extend our presence in the entertainment sector. By combining Vivendi’s games business with Activision, we are creating a worldwide leader in a high-growth industry. We are excited about the opportunities for Activision Blizzard as a broader entertainment software platform. We believe this transaction will create significant value for Activision Blizzard and Vivendi stockholders. In Activision, we have found a partner with a highly complementary business and strong operating team. Bobby Kotick and Brian Kelly are industry pioneers, well known for creating
shareholder value. The combined strength of the existing management teams at both companies will set the stage for further profitable growth of Activision Blizzard. We look forward to being an active and supportive majority stockholder in a company that is poised to lead the worldwide interactive entertainment industry in the years ahead.”

René Penisson, Member of the Management Board of Vivendi and current Chairman of Vivendi Games, added: “We are very confident that by combining forces, Activision Blizzard will set the highest standards in quality, reputation and profitability, and will bring together the best creative teams in the industry. The combination of this unique product portfolio with highly professional employees gives us great confidence in the growth prospects for Activision Blizzard.” Said Robert Kotick, Activision’s Chairman and Chief Executive Officer: “This is an outstanding transaction for Activision and our stockholders, as well as a pivotal event in the continuing transformation of the interactive entertainment industry. By combining leaders in mass-market entertainment and subscription-based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences. By joining forces with Vivendi Games, we will become the immediate leader in the highly profitable online games business and gain a large footprint in the rapidly growing Asian markets, including China and Korea, while maintaining our leading operating performance across North America and Europe. Activision stockholders will benefit from significantly increased earnings power and the recurring nature and predictability of subscriptionbased revenues, while also having the opportunity, if they choose, to receive $27.50 per share for a portion of their shares in the post-closing tender offer.”

Kotick continued: “Vivendi Games provides Activision with unique strategic and financial benefits and will allow us to leverage our franchises into emerging online opportunities as Blizzard has done so successfully. Activision has been very focused on margin expansion, and this transaction will meaningfully increase our overall operating margins as we expand our franchises online and in new geographies. Diversifying our revenue base among subscription-based online, console and PC formats, as well as wireless and casual emerging opportunities, gives us the broadest platform to capitalize on industry growth. With Blizzard’s successful franchises, such as World of Warcraft, StarCraft and an exciting pipeline of yet-to-be announced titles, Vivendi Games’ and Blizzard’s management team will join with Activision’s strong and experienced leaders to become an even more powerful force for innovation in online and offline interactive entertainment across a wide range of platforms. This transaction also provides a unique relationship with Universal Music Group – the world’s largest music company – which will benefit Guitar Hero and further extend our sizable leadership position in music-based games.”

Mike Morhaime, President and Chief Executive Officer of Blizzard, added: “Blizzard’s industry-leading PC games business, with a track record of nine consecutive bestsellers and a global subscriber base of more than 9.3 million World of Warcraft players, is an exceptional fit for Activision’s highly profitable console games business. From our interactions with the Activision team, it is clear we have much in common in terms of our approaches to game development and publishing. Above all, we are looking forward to continue creating great games for Blizzard gamers around the world, and we believe this new partnership will help us to do that even better than before.”

Structure & Terms of Transaction
Under the terms of the agreement, Vivendi Games will be merged with a wholly owned subsidiary of Activision. In the merger, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock. Based on the transaction price of $27.50 per share of Activision common stock, this implies a value of approximately $8.1 billion for Vivendi Games. Concurrently with the merger, Vivendi will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share – a premium of 31% to Activision’s average closing price over the past 20 trading days – for a total of $1.7 billion in cash. As a result of these transactions, Vivendi will own an approximate 52% ownership stake in Activision Blizzard on a fully diluted basis.

Within five business days after closing the transaction, Activision Blizzard will launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 per share. The tender offer will be funded by Activision Blizzard’s cash on hand at closing, including the $1.7 billion in cash received from the Vivendi share purchase. In addition, Vivendi has agreed to acquire from Activision Blizzard additional newly issued shares for up to an additional $700 million of Activision common stock at $27.50 per share, the proceeds of which would also be used to fund the tender offer. Any remaining funds required to complete the tender offer will be borrowed by Activision Blizzard from Vivendi or third-party lenders. If the tender offer is fully subscribed, Vivendi will own an approximate 68% ownership stake in Activision Blizzard on a fully diluted
basis.

The transaction is expected to be immediately accretive in its first year post-closing for Activision’s stockholders and slightly accretive for Vivendi’s stockholders. Activision Blizzard is targeting pro forma operating income of $1.1 billion and pro forma earnings per share (EPS) in excess of $1.20 in calendar year 2009. The transaction is expected to be at least $0.20 accretive to Activision stockholders in calendar year 2009.

Governance
Activision Blizzard’s board of directors will be comprised of eleven members: six directors designated by Vivendi, two Activision management directors and three independent directors who currently serve on Activision’s board of directors. René Penisson, currently a member of the Management Board of Vivendi and Chairman of Vivendi Games, will serve as Chairman of Activision Blizzard. Brian Kelly, currently Co-Chairman of Activision, will serve as Co-Chairman of Activision Blizzard. The three independent directors will be Richard Sarnoff, Robert J. Corti and Robert Morgado. Other Activision Blizzard directors will be Robert Kotick (President and Chief Executive Officer of Activision Blizzard), Bruce Hack (Vice-Chairman and Chief Corporate Officer of Activision Blizzard), Jean-Bernard Lévy (Chairman of the Management Board and Chief Executive Officer of Vivendi), Doug Morris (Chairman and Chief Executive Officer of the Universal Music Group), Philippe Capron (Member of the Management Board and Chief Financial Officer of Vivendi), and Frédéric Crépin (Senior Vice President, Head of Legal, Vivendi).

Management
Following the completion of the transaction, Robert Kotick will be President and Chief Executive Officer of Activision Blizzard. Bruce Hack, current Chief Executive Officer of Vivendi Games, will serve as Vice-Chairman and Chief Corporate Officer of Activision Blizzard, accountable for leading the merger integration and the finance, human resources and legal functions. Mike Griffith will serve as President and Chief Executive Officer of Activision Publishing, which after closing will include the Sierra Entertainment, Sierra Online and Vivendi Games Mobile divisions in addition to the Activision business. Mike Morhaime will continue to serve as President and Chief Executive Officer of Blizzard Entertainment. Thomas Tippl, currently Chief Financial Officer of Activision, will be appointed Chief Financial Officer of Activision Blizzard and Jean-François Grollemund, currently Chief Financial Officer of Vivendi Games, will be appointed Chief Accounting Officer of Activision Blizzard.

Conditions to Closing
The transaction has been approved by the boards of directors of Vivendi, Vivendi Games and Activision. The transaction is subject to the approval of Activision’s stockholders and the satisfaction of customary closing conditions and regulatory approvals, including expiration of applicable waiting periods and receipt of applicable approvals under the Hart-Scott-Rodino Antitrust Improvements Act and European Union merger control regulations. Pending regulatory and stockholder approval, the companies expect the transaction to be completed in the first half of calendar year 2008.

Financial and Legal Advisors
Activision’s financial advisor on the transaction is Allen & Company LLC and its legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP. Vivendi’s financial advisor is Goldman, Sachs & Co. and Gibson, Dunn & Crutcher LLP is acting as legal counsel to Vivendi.

About Vivendi
Vivendi is a global leader in digital entertainment with activities in music, TV, cinema, mobile, internet, and games through its ownership of Universal Music Group, Canal+ Group, SFR, Maroc Telecom and Vivendi Games. In 2006, Vivendi had revenues of over €20 billion and a global headcount of 39,000. Listed on the Paris Stock market, Vivendi is a member of the CAC 40.

About Vivendi Games
Vivendi Games is a global developer, publisher and distributor of multiplatform interactive entertainment. The company is the leader in the subscription-based massively multi-player online role-playing games (MMORPG) category and is building on its position in the PC, console and handheld games markets. Vivendi Games has a global presence, a history of franchise success, development teams around the world and a catalog of its own original and licensed material. Vivendi Games has approximately 4,000 employees and is driven by four creative divisions: Blizzard Entertainment, Sierra Entertainment, Sierra Online and Vivendi Games Mobile. Irvine, California-based Blizzard, creator of the Warcraft, StarCraft and Diablo games series, is by far
the largest of the four entities with approximately 2,300 employees.

About Blizzard Entertainment, Inc.
Best known for blockbuster hits including World of Warcraft and the Warcraft, StarCraft, and Diablo series, Blizzard Entertainment, Inc. (www.blizzard.com), a division of Vivendi Games, is a premier developer and publisher of entertainment software renowned for creating some of the industry’s most critically acclaimed games. Blizzard Entertainment’s track record includes ten #1-selling games and multiple Game of the Year awards. The company’s online-gaming service, Battle.net®, is one of the largest in the world, with millions of active users.

About Activision, Inc.
Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.5 billion for the fiscal year ended March 31, 2007. Activision has more than 2,000 employees worldwide. Activision maintains operations in the United States, Canada, the United Kingdom, France, Germany, Ireland, Italy, Scandinavia, Spain, the Netherlands, Australia, Japan and South Korea.