Yahoo bids on Hulu: Is Mayer another Bartz?
(MoneyWatch) Yahoo (YHOO) wants to get into the television and movie business with a bid on Hulu, according to Kara Swisher at AllThingsD. The amount, which could range from $600 million to $800 million, would depend on content licensing rights among other things.
But wait, there's more. If Swisher is right, Yahoo could be considering upwards of $400 million more in other near-term acquisitions. All this after acquiring blogging site Tumbr. Maybe this is the beginning of a Yahoo revitalization. Then again, maybe this is strategic history repeating itself, as Yahoo's direction continues to look somewhat like it did under former CEO Carol Bartz.
- Yahoo buys blogging site Tumblr for $1.1 billion
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Given the $20 billion in revenue YouTube will get by 2020, according to a Morgan Stanley estimate, there's an obvious reason why bidders might find other video businesses of interest. Hulu has potential access to a wider range of newer programming because it is owned by some of the big studios.
Changing video landscape
It's all part of the greater realignment in media. Cable companies are concerned about threats from online. Everyone in the traditional video industry is concerned about pressures to end the bundling of video channels -- an industry practice that improves revenue by forcing people to purchase a large menu of programs they never watch.
Netflix is not only looking to recycle programming, but is buying new material and keeping it away from cable. Google (GOOG), though YouTube, and Amazon (AMZN) are planning their own original programming. Yahoo doesn't want to be left behind.
Did someone say coherent strategy?
There does seem to be signs of change at Yahoo. The stock price is up about 80 percent from its 52-week low and CEO Marissa Mayer has instituted a number of cultural changes reminiscent of her previous employer, Google. But from a strategic view, things aren't much different than before.
Yahoo had developed over time into a collection of largely independent properties that drew traffic but didn't improve revenue. In its most recent quarter, Yahoo revenue after traffic acquisition costs was flat year over year. The company is still a collection of properties without a unified core business.
In addition, there are questions about how wise the acquisitions are. Tumblr was deeply in the red with relatively small revenue given the number of users. Buying Hulu doesn't guarantee continued access to its video content. Furthermore, Hulu's paying audience of 4 million is a fraction of the one Netflix has.
Everything new sounds old again
Perhaps Yahoo is planning some sort of integration between blogging, watching videos, mobile, and the like. As Swisher reports, "But, said sources, while allowing the bid to proceed, Mayer is more focused on the integration of Tumblr, as well as other acquisitions that will bolster other key product areas."
But piecing together acquisitions into something coherent is difficult. In all its existence, the company has yet to prove that it can accomplish such a task.
Furthermore, Mayer is starting to sound eerily like her predecessor, Carol Bartz. Just look at what David Weir reported on the KQED's blog:
"She talks a lot about how Yahoo is about people's daily habits, and about how we can make them inspirational and entertaining," said Marcus Spiering, head of product for Flickr. "Photos are one of those daily habits--they make the world go round."
And here is what Carol Bartz said in a 2009 earnings release:
"I'm pleased with our results this past quarter. We established a clear, simple vision to be the center of people's lives online, and we're backing that vision with important initiatives to create 'wow' experiences for our users. We're confident that this vision will put us on the right path to growth and profitability long term. Our new homepage is a perfect example of our efforts to create innovative products aimed at increasing user engagement while offering the most compelling advertising proposition in the industry."
The problem for both is that Yahoo was and is a fractured company. There is no internal unifying factor, which leaves an external one: consumers. But a business cannot survive by becoming the hub around which people buzz, because that is a company-centric, not customer-centric, approach.
Unless Mayer can see that difference and somehow drastically reshape Yahoo in a way that no one before has been able to do, chances are that her tenure will ultimately resemble Bartz's in other ways, as well.
Erik ShermanErik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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