Yahoo! fights for survival
One company dominates online news, sports and finance. It has more visitors to its news site than the runner-up in the category, CNN, more in sports than ESPN and more in finance than Dow Jones, owner of The Wall Street Journal. That online media colossus is Yahoo, and it is in distress.
Despite a huge audience of 686 million users and resources like high-tech film studios and talent-filled newsrooms, Yahoo’s future is in doubt. Potential buyers are circling to pick up parts after the messy firing last month of Carol A Bartz, Yahoo’s chief executive. Yahoo’s portfolio of media sites is the company’s crown jewel and potentially its savior.
The company announced on Monday that it had partnered with Walt Disney’s ABC unit to showcase articles and videos from ABC News, and to create a co-branded website for ‘Good Morning America.’
But the Yahoo sites also suffer from symptoms infecting the rest of the company: shifting priorities and a shortage of innovation. Yahoo has another problem too: a lack of respect. “If we ask somebody on the street, ‘What’s the top news brand?' Would they say Yahoo news?” said Mickie Rosen, the senior vice president who oversees Yahoo’s media properties. “The honest answer is they probably wouldn’t.”
Original reporting
Yahoo built its huge audience largely by aggregating news from other sources. The Associated Press, US Weekly, Politico and The New York Times are just some of the partners that feed it content around the clock. Now Yahoo executives are pushing for original reporting, covering special events like the Emmys and creating exclusive online video programmes.
To entice users to click on more articles, Yahoo is increasingly trying to personalise its site so that the topics that appear are more in tune with the tastes of individual users. Yahoo’s home page already shows more than 13 million variations daily. A new service introduced along with Facebook’s announcement of new features allows users to see and share Yahoo news articles that they and their Facebook friends have read.
Aggregating from other sources made it difficult to develop innovative ways to deliver that content through smartphones and tablet computers, Kramer said. It fumbled Livestand, an iPad app that combines articles from various publications into a single and slickly designed digital magazine.“They could be the pre-eminent news organization in the world because they have so many customers,” Kramer said. “They have what every newspaper would kill for.”
It does have the audience. In August, Yahoo led the general news category with 81.2 million unique visitors in the United States, according to comScore. CNN, the second-place site, had 75.3 million visitors during the same period while The Huffington Post Media Group had 56.8 million. Nine of Yahoo’s media sites lead their category in traffic.
But Yahoo’s size has failed to translate into revenue growth. Revenue from display ads, the online billboards that appear when a Yahoo Web page is called up on a computer screen, were essentially flat in the first six months of the year, at $1 billion, while the online ad industry grew at about 27 per cent.
Indeed, Yahoo now films around 26 shows a month, many of which attract large audiences, at least by Internet standards. Yahoo said that 26 million people watched its original programming in August, more than watched Hulu, the video site backed by several Hollywood studios.
They want to produce even more. Seven new series will have their premieres this week, including one about relationships, two cooking programs and another in which men get advice about making memorable wedding proposals.
Yahoo also tried to acquire Hulu earlier this year, according to a source familiar with the matter who was not authorized to speak on the record. It is unclear whether Yahoo’s board plans to press ahead amid the distraction of a strategic review of its business and a potential sale of all or parts of the company.
The possibility of its own buyout or break-up casts a shadow over Yahoo, though all the executives interviewed said that it was business as usual inside the company. Scott Kessler, an analyst at Standard & Poor’s Capital IQ, said that uncertainty was the norm inside Yahoo, which in recent years has had a succession of leadership changes, departures of top executives and the battle to ward off a takeover by Microsoft.
“First they need to stabilise the ship,” Kessler said, “and then they need to turn it in the right direction.”
