After three months of negotiations, Microsoft today announced the appointment of former top CBS executive Nancy Tellem as Entertainment & Digital Media president.

Related: Microsoft In Talks With Nancy Tellem For Top Entertainment Post

Tellem will oversee the launch of a newly created production studio in Los Angeles that will develop interactive and linear content for Xbox and other devices. In addition to running the production studio, she will help spearhead the company’s efforts to turn Xbox into a leading entertainment platform. She will report to Phil Spencer, corporate VP, Microsoft Studios. “The Xbox is already a consumer favorite, and we now have a tremendous opportunity to transform it into the center of all things entertainment — from games, music and fitness to news, sports, live events, television series and movies — so consumers have one destination for all their entertainment needs,” Tellem said. “I look forward to building a studio team that embraces the challenges of creating true interactive content that the Xbox platform supports and to work with talent to create content that will change the way entertainment content is experienced and delivered.” Added Spencer, “We are embarking on a new chapter with the creation of a studio dedicated to making original interactive and linear content, and I’m excited to have Nancy leading this effort.”

Tellem has been at CBS since 1997, most recently as senior adviser to CEO Leslie Moonves. She joined the network as EVP Business Affairs and head of CBS Prods. One year later, she was promoted to president of CBS Entertainment and eventually rose to president of the CBS Network TV Entertainment Group, a position she held until segueing into an adviser arrangement in 2010.

Microsoft had been toying with the idea of a bigger entertainment presence for a while and began quietly looking for an entertainment executive late last year when it hired Tom Schneider, a partner at Stratis LLC, to conduct a search. Microsoft aimed high, going primarily after top-level TV executives. Tellem, who has been on headhunters’ list for virtually every high-level TV job for the past few years, was initially asked informally by Microsoft brass for recommendations in the search. Tellem reportedly suggested executives she thought may be suitable to lead Microsoft’s foray into entertainment content. Several months later she herself was approached for the job.

Microsoft has been slow to enter the entertainment space, with much younger competitors like Google already making strides. In addition to traditional software/Web companies, Microsoft has to compete with such emerging digital entertainment players as Netflix and Amazon, which have amassed content and have also expanded into original production. Microsoft previously explored a partnership with former News Corp president-turned-producer Peter Chernin in 2010 to launch a TV channel for Xbox Live users. Xbox Live’s biggest programming announcement to date was in October 2011, when the company unveiled a slew of content deals with more than 40 U.S. and international providers including Bravo, Comcast, HBO GO, Verizon FiOS, Syfy and the BBC. Microsoft had said that its ultimate goal is to make its video game console a one-stop shop for entertainment where users can switch easily between video games, DVDs and entertainment content.