'Net giant expands L.A. office to cement partner pacts
Is Yahoo! Hollywood’s new best friend or a looming competitor?
The town is about to find out as the No. 1 Net portal roughly doubles its presence from the several hundred employees in L.A. today, all working under newly installed head of media Lloyd Braun, the former prexy of ABC.
Divisions including movies, music, TV, news and sports will move from Yahoo’s existing L.A. digs and its Northern California headquarters into Yahoo! Center, a Santa Monica office complex where the Netco has just signed a 10-year, $100 million lease for 230,000 square feet.
When Terry Semel took Yahoo’s reins in 2001, its showbiz presence was limited to pleading with studios for scraps of their marketing budgets. That effort succeeded, and analysts say Yahoo now makes tens of millions from showbiz advertising.
A typical movie buy for a pic on Yahoo now reaches into six figures, with big deals approaching $1 million.
At the same time, Yahoo is facing increased competition from AOL, which is pouring big money into its Moviefone site to make it a top online destination for moviegoers, and studios’ ad dollars.
When marketing execs at studios have new trailers or other content they want to debut online, they typically play the two companies off against each other to see which will give it better placement, including the much coveted spot on the home page, in return for exclusive access.
Search giant Google is poised to become a rival for studio ad dollars as it grows its recently launched video service.
That stepped-up rivalry has come as welcome relief to many in Hollywood who say Yahoo was starting to rest on its laurels.
“They used to be willing to jump through hoops and do anything for us,” notes one studio insider who regularly deals with Yahoo. “Now that they have gotten all of Hollywood’s business, they take it for granted.”
But Yahoo has developed much loftier Hollywood ambitions than just getting studio marketing dollars.
The shift in priorities is clear in recent changes to the management structure. Former Hollywood topper Jim Moloshok, an ex-WB exec recruited by Semel, shifted last summer from focusing primarily on recruiting advertisers to a new post in which he signs partners to provide Yahoo with exclusive content. And he now reports to Braun, who was tapped exclusively for his development experience and talent relationships and won’t be selling ads.
Insiders expect Braun to soon start developing capabilities to create original content for Yahoo. Company isn’t yet talking, but attractive options include working Hollywood talent to debut animated or video shorts online at low cost. If the property hits big, Netco can work with other media companies to translate it into TV or vidgames at the same time it starts generating significant ad revenue online.
Either way, Braun has made it clear that he hopes to make Yahoo a less bureaucratic and lower-risk home for creatives, perhaps focusing more on JibJab-style content that grows from the grassroots rather than making deals with big, expensive names.
Currently, Yahoo’s movies, TV and music sites are a mix of promotional clips from studios, services like ticket sales from partner Fandango and exclusive content from partners.
After over a year of effort, Moloshok has signed three such deals, two with big Hollywood players. Yahoo is now the online home for Mark Burnett Prods.’ “The Apprentice” and “The Contender”; Paramount’s “Entertainment Tonight”; and cartoons from JibJab, creators of popular Net cartoon “This Land Is Our Land.”
The Burnett deal is particularly illustrative of where Yahoo hopes to go, insiders say. While NBC still has promotional Web sites for the shows, exec kept the interactive rights for his shows and provides Yahoo with exclusive content such as extra footage.
In all its partnerships, Yahoo splits advertising revenue from the partner sites, including lucrative streaming video ads. For independent producers like Burnett, as well as studios with a weak Web presence like Paramount, that represents found money.
“Our site was not sold with a great deal of success before Yahoo,” observes Mike Michler, exec VP of marketing at Paramount Domestic TV. “But that’s their core competency. And they give us much bigger distribution so we get more eyeballs looking at the content.”
But major media companies, including Paramount parent Viacom, have indicated they want a bigger business online to benefit from the boom in Net advertising. Many Web execs at studios and networks say they’d be wary about ceding any control of their Net presence to a partner, preferring instead to grow their own operations.
But Yahoo isn’t looking to take no for an answer, banking much of its future on exclusive content, whether originally developed internally or by partners.
“It took a long time for Yahoo to be convinced there’s any value in original content,” notes a source who has dealt with the company. “But now it’s an key part of their plans.”