By Peter Csathy
Is the Yahoo saga nearing an end/new beginning? Final bids in the Yahoo mega-auction are due today. So it’s worth revisiting why Yahoo still matters — its 4 core assets — and the media strategy that still has the potential to unlock substantial enterprise value in the right hands (which many still believe will be Verizon — more on that below).
I. Yahoo’s Core (& Under-Appreciated) Assets
(1) Its Brand — everyone knows Yahoo, worldwide … that’s power (in the right hands).
(2) Its Massive Base — let’s not forget how big Yahoo really is … because it is (world’s 5th most visited website according to Alexa — which is much bigger than AOL, and AOL got $4.4 billion).
(3) Its Content — Yahoo still creates compelling content (finance, lifestyle, news and sports are its strengths), but it doesn’t make enough of the “right” content (video), it doesn’t sufficiently focus on the right platform (mobile), and it never developed a coherent content strategy (vision). Without clarity and vision, teams cannot succeed (and Yahoo didn’t … but it can). More on that below.
(4) Its Sales Force — AOL has programmatic strength; Yahoo has a powerful human sales force that did the best it could amidst the non-clarity and chaos.
II. The Right Strategy — Media
Don’t underestimate the power of those ingredients above. Because they are potent. In the right hands, of course. Make no mistake, Yahoo had the potential to transform itself into being a leading digital-first media company (with the higher valuations that go with it) — which means mobile-first, video-first content targeting the demographics that marketers love (i.e., the young). But, the opportunity was lost. More like fumbled. No coherent strategy. No execution. Just jumbled moves (Katie Couric, “Community,” NFL streaming rights for one game … from London) and revolving doors (several executives who came and went confided in me about their empty promises of empowerment amidst the management layer cake). In the meantime — and while Yahoo flailed — Facebook, Snapchat and others boldly acted and evolved into digital media leaders (and real YouTube challengers).
A buyer with real media vision and real media talent — and with a commitment to employee empowerment and morale — could still make a “go” of it and bring Yahoo back to a position of leadership if it were to act boldly and swiftly.
That’s when M&A magic happens. When management layers are stripped away. When vision, focus, empowerment and morale happen. That’s when money again rains down. And, enterprise value goes up.
It’s transformation time.
III. Why Is Verizon Still Considered to be a Leading Candidate
Verizon certainly is not the only one in the hunt (Recode lays this all out here). But Verizon makes a lot of sense. Verizon has already demonstrated the “will” (buying AOL for $4.4 billion — which, by the way, is the same number Lionsgate just agreed to pay to buy Starz). And Yahoo is a lot like AOL in terms of its DNA. Combining those assets, Verizon could significantly reduce redundancies (which, sadly, means significant jobs lost). Verizon would achieve massive content and media scale with a combined Yahoo and AOL — scale which a sales force could translate even more effectively into mega-bucks — especially in our millennial and mobile-first world.
Peter Csathy is founder and chairman of Creatv Media, a new digital-focused company offering a broad swath of services, ranging from strategic introductions and consulting to marketing, distribution and direct investments. Prior to that, he spent three years as the CEO of consulting and legal services firm Manatt Digital Media.