Yahoo Courts Couric as Mayer Accelerates Turnaround EffortBrian Womack and David Holley
Yahoo! Inc.’s push to hire Katie Couric, who once earned as much as $15 million a year anchoring the “CBS Evening News,” signifies an accelerated drive by Chief Executive Officer Marissa Mayer to build content as more consumers turn to the Internet for television-style reporting.
Couric is joining as Global Anchor, Yahoo said in a statement today, giving Mayer another recognizable name to draw viewers and advertisers as the CEO tries to jump-start a turnaround. Since September, Mayer has brought aboard gadget reviewer David Pogue, political reporter Matt Bai, and editor Megan Liberman, all from the New York Times Co.
Mayer, CEO since July 2012, is striving to build a news business to make her site a stronger alternative to Google Inc. and Facebook Inc. for advertising dollars. Yahoo shares have surged more than 130 percent on her watch, with investors drawn by more than $5 billion in stock buybacks and its stake in Internet companies such as Alibaba Group Holding Ltd., China’s online marketplace for everything from fruit to Boeing 737s.
“There’s no single thing they can do that will really flip the switch, and then revenues start appearing,” said Greg Sterling, an analyst at Opus Research in San Francisco. Mayer has “done a very good job in some of these foundational moves in making it possible for Yahoo to hire, to recruit.”
New products, redesigned e-mail and a spending spree on engineers and media figures so far haven’t translated to growth. Sunnyvale, California-based Yahoo last month forecast fourth-quarter sales, minus revenue passed on to partner sites, that fell short of analysts’ projections. Revenue will be little changed this year, according to estimates compiled by Bloomberg.
“At Yahoo, we are investing in bringing our users the absolute best content and video experiences available,” Mayer said in the statement.
With Couric, Yahoo would gain a contributor who is already well-known to advertisers, analyst Sterling said. Couric, 56, was a co-host of NBC’s “Today Show” for 15 years and currently hosts “Katie,” a weekday talk show distributed by Walt Disney Co.’s ABC.
“She’s a very brand-friendly personality, especially for a female audience,” Sterling said. “They’re looking to get TV-style brand advertisers to spend with them.”
To allow the talks with Yahoo, ABC let Couric out of an agreement to produce segments only for its network news division, the people said, adding that Couric wants to continue hosting her talk show. A decision on whether to renew “Katie” for a third season will be made next month, Disney-ABC Domestic Television said in an e-mailed statement on Nov. 22.
Consumers are increasingly accessing television and other video content through digital devices. Services such as Hulu LLC, Amazon.com Inc. and Netflix Inc. have encouraged users to access TV content whenever and wherever they want, be it on a computer, tablet or smartphone.
In the third quarter, Los Gatos, California-based Netflix passed Time Warner Inc.’s premium-cable outlet HBO in paid U.S. subscribers, reaching a total of 31.1 million.
Mayer already signaled she sees news and content as important to Yahoo. During a call with analysts last month, she noted the hiring of Liberman and said the company sees opportunity in this area.
“Megan’s hire reinforces our commitment to delivering the best possible news and content experiences to our users, and we will continue to invest in our talent here,” Mayer said then.
When Pogue’s hiring was announced Oct. 21, Mayer said he would lead a major expansion of Yahoo’s technology coverage. Pogue, who reviewed new consumer technology gear for the New York Times, spent more than a dozen years at the newspaper.
Earlier this month, Yahoo News said it hired Bai, the former chief political correspondent for the New York Times Magazine, as its national political columnist.
Even before Mayer’s arrival, Yahoo had established a beachhead by investing in sports-news coverage. It’s paid off with reporters delivering high-profile scoops that have helped build its reputation in the media.
In April, Yahoo Sports was first to report singer Jay-Z, whose real name is Shawn Carter, was seeking to sell his stake in the Brooklyn Nets to expand his fledgling sports representation business into professional basketball.
One of its biggest scoops, in 2011, reported that a University of Miami booster provided impermissible benefits to at least 72 athletes from 2002 through 2010. The story was released after an 11-month investigation by the Yahoo Sports reporter. Last month the National Collegiate Athletic Association said the school would lose three football scholarships after the long inquiry.
Bolstering the status of its news sites, while helpful, isn’t enough to get Yahoo over the hump, said Colin Gillis, director of research and a senior technology analyst at BGC Parters LP in New York.
“For the turnaround to really take hold, they need a multipronged approach beyond just being a content play,” Gillis said. Alibaba, for example, has been “funding and supporting the valuation of the current stock while they make effort to turn the process around.”
To infuse engineering talent and innovative products into Yahoo, Mayer has been on a buying spree, acquiring at least 19 companies. They include mobile-application makers Stamped Inc., Jybe Inc. and Summly Ltd.,the news-reading application created by teenager Nick D’Aloisio. Her biggest deal was blogging site Tumblr Inc., which Yahoo bought for $1.1 billion earlier this year.
The purchases so far haven’t been enough to drive sales growth. Revenue, minus sales passed on to partner sites, declined 1 percent during the third quarter from the year-earlier period, the same decline Yahoo had in the second quarter as well.
While Mayer works on the turnaround, Yahoo is raising money that will bolster a cash balance that’s dropped by more than $6 billion in a year and may help fund acquisitions and share repurchases at a time when investors, analysts and traders say asset excesses are again forming in Internet stocks.
Yahoo shares are approaching $40 for the first time since January 2006. The stock declined less than 1 percent to $36.22 at 12:17 p.m. in New York, and is up 83 percent so far this year as of Nov. 22. It’s trading at about 31 times its estimated earnings, compared with the average of about 17 for the Standard & Poor’s 500 Stock Index.
Yahoo issued $1.25 billion of five-year convertible notes last week that can be exchanged for shares and don’t pay interest, the biggest zero-coupon deal since Microsoft Corp. sold a similar amount in 2010. A conversion price of $53.43 means buyers would need shares to rise by at least 50 percent to receive more at maturity than they paid. That’s to a level the stock hasn’t matched since it began a 97 percent plunge in 2000 from a split-adjusted record $118.75.