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Yahoo Seeking Its Own Content

The Internet portal is exploring deals with Hollywood to create exclusive entertainment programs, sources say.

November 08, 2004|Chris Gaither | Times Staff Writer

Yahoo Inc. is quietly but aggressively lobbying Hollywood to create programs to be shown exclusively on its network of websites.

People familiar with the discussions say Yahoo is pressing entertainment-industry producers and talent agents to start pitching new shows and short films that the Internet giant could license for broadcast online. No longer satisfied to simply repackage film trailers and TV clips, some Yahoo executives believe the surge in broadband connections means the Internet may finally be ready to operate more like a television network, these people said.

Since taking the reins in 2001, Yahoo Chief Executive Terry Semel has compared the company to an early-day cable network. HBO, for example, started in 1972 by showing movies months after they left the big screen, but it's now best known for home-grown shows such as "The Sopranos."

Yahoo spokeswoman Joanna Stevens declined to comment on the company's plans, calling the discussions "purely exploratory."

The shift toward developing original programs was underscored last week by the announcement that Sunnyvale, Calif.-based Yahoo had hired former ABC television network Chairman Lloyd Braun to run its media and entertainment group in Santa Monica.

Braun himself hinted at the change. In an interview, he said he envisioned a programming "mosaic" composed of content from TV networks, such as the NBC series "The Apprentice," and original material produced expressly for Yahoo.

"I already sense a tremendous appetite on the part of the creative community to access the Internet as a platform to distribute content," said Braun, who oversaw development of such hit shows as "Desperate Housewives" while at ABC. "There is an enormous amount that can be mined in the creative community here, and that's no question a part of what we'll be doing."

The business model is unclear, but Yahoo is considering advertising and subscription fees to cover the cost of the programs, according to a person familiar with the situation.

Jim Moloshok, a former Warner Bros. executive who is Yahoo's senior vice president of entertainment and content acquisition, has been pitching the plan to agents and producers for nearly six months. Talent agency executives expect to begin meeting with his new boss, Braun, shortly after he reports to work Nov. 15.

Yahoo's programming efforts would help set the company apart from its online rivals -- especially Web search pioneer Google Inc. While Google is plastering billboards with complicated math problems to recruit bright engineers and reinforce its reputation as a haven for geeks, Yahoo trumpets entertainment-industry hires such as Semel, a former Warner Bros. chairman, and Braun.

Yahoo has offered TV-like programming before, only to retreat in the face of weak demand. Yahoo Platinum, an online network of streamed sporting events and other television shows, was shuttered in late 2003 after people balked at paying $9.95 a month. In 2002, Yahoo closed a 2-year-old programming effort called Finance Vision and attributed its failure to a weak online ad market and slower-than-expected broadband penetration.

Yahoo thinks consumers will embrace its efforts this time around. More than half of Web surfers in the U.S. have high-speed Internet connections at home, and people who use broadband spend much more time online than people who surf the Web on dial-up connections.

Besides, Yahoo needs to create more places to put ads. By luring Web surfers with sports scores, news stories and other information, the company raked in $1.2 billion from online advertisers in 2003. Now the portal is running out of space to put more ads and sponsorship notices.

Video ads that resemble TV commercials command even higher prices, and that could more than cover Yahoo's costs.

"If you do the spreadsheets, you can actually afford to do the content," said AtomShockwave Corp. CEO Mika Salmi, whose company licenses and streams short online films on the Web, including the popular political satires from JibJab Media Inc. "There is serious money to be made if you have a large enough audience and attract the advertisers."

Salmi said he didn't expect Yahoo to commission the next "Friends," with multimillion-dollar paychecks for its stars, but he thinks the Internet company can pull off original programming.

The strategy would protect Yahoo if the TV networks decided to put more of their shows online themselves, said a person familiar with the talks. For example, when it wanted to post exclusive outtakes from "The Apprentice" on its site, Yahoo went first to the show's producer, Mark Burnett, instead of to NBC.

"How do you know the supply of derivative content is going to keep up?" the person said. "Going past the networks and dealing directly with the producers protects the pipeline to Yahoo."

Standard & Poor's analyst Scott Kessler said Yahoo's discussions were a step in the right direction. But he added that the company would have to find the right business model, which so far has eluded nearly everyone.

"JibJab has been a phenomenon," Kessler said. "But it's been pretty obvious that video content on any paid basis hasn't worked out so well on the Internet."

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