As previously reported by CNET, the deal involves redesigning TV Guide's iGuide Web site to offer four channels focusing on TV, movies, music, and sports.
The service, which will be renamed the TV Guide Entertainment Network, will offer more than 200,000 pages of content, including a movie database, quizzes, and soap opera news as well as chat sites featuring entertainment and sports figures.
The service will more closely reflect WebTV's contents and style, providing links on both the TV Guide Web site and WebTV monitors. The site will provide all local information from the 132 editions of TV Guide distributed nationally and can be customized for users.
"People want to interact with entertainment sources in new and different ways, always looking for a deeper experience," said Steve Perlman, cofounder, president, and chief executive of WebTV, in a statement.
The idea is to use WebTV as the bridge between the Internet and television. For example, users would find out what's on TV from the TV Guide Web site with a WebTV Internet terminal. Then, with the same handheld device, they would click to television and watch the show.
By toggling back and forth, they could use Internet to guide them on TV. Analysts say such deals are needed to help consumers understand the benefits of Net content.
Because TV Guide is one of the most widely recognized consumer brands, it should be a significant boon to WebTV. The venture also reduces the risk and increases the rewards for Murdoch's News Corporation, which plans to make the service the centerpiece of its Internet efforts.
News Corporation and other media giants, such as Time Warner and Viacom, have been leery of operating Web sites as standalone operations that do not have parallel media operations that can be used for cross-promotion in broadcasting or print.
Last week, the Yankee Group consultancy released a study saying WebTV's success doesn't hinge on "couch potatoes" but on existing online and PC users. But the TV Guide-WebTV deal will undoubtedly lure some couch potatoes, too.
To boost sales, WebTV has been adding features to its product while keeping a $500 lid on its retail price. Last week, for example, it announced a deal to bring more video to the Net-surfing experience.