Yahoo reshuffles, and Google follows it in Asia

Today's news, slipped in after the markets closed, was that Yahoo has finally reshuffled its top management, with Terry Semel out as CEO and Jerry Yang in. In an attempt to appease frustrated shareholders as Yahoo continues to lag behind Google in popularity (both for searches and for ad sales), Susan Decker has also been promoted up to the newly-created role of president to support Yang.

Jerry Yang, who was one of the founders of Yahoo, has in recent years focussed a lot of his attention on the company's growth in Asia. The search giant has struck some very fruitful deals in the East, for example partnering with Softbank in Japan to offer a hugely popular Internet and broadband service. And when things started to go awry in China, Yahoo decided to bank on a similar type of arrangement, striking up a joint venture with local partner Alibaba, of which it now owns 40%. It's also attracted controversy for complying with Chinese authorities to provide information about its users (with them subsequently landing in jail for making anti-government statements).

Human rights notwithstanding, if Yahoo was hoping that it had stolen a march on Google in the East, Jerry Yang might have to rethink the strategy. Last week, Google announced it would team up with the Chinese portal Sina to offer services on the mainland. Google already has a respectable portion of the market for search in China (some 19% according to Analysys International), but it has found it difficult to gain the same kind of dominance in China as it has in other (western) parts of the world. Now Google is following in the footsteps of its rival Yahoo in teaming up to target the market. Google has also taken a similar route in South Korea, and one wonders if Japan or other Asian countries might also be JV targets.

Chatting about this deal with our Hong Kong-based correspondent Craig, he relayed this anecdote: "I tried using Google inside China's great firewall and it was amazing how frustrating and useless it is as everything's blocked. The way China controls stuff, you really need a partner."

He went on to say that the Sina deal makes sense as China will continue to focus on holding up national Internet champions. China doesn't have laws enforcing joint ventures for foreign Internet companies that want to do business in the country (as it does for infrastructure-based businesses like telecoms). But the moves by Yahoo aligning with Alibaba and Yahoo teaming with Sina demonstrates that this seems to be the de facto route anyway.

Week in review: News Corp. and fiestas

(from the TC+M web site on Friday if you missed it...)

It's been another good week for big fish eating up smaller fish in the media world. This week that seemed to largely translate to big media giants consolidating smaller social media plays into their strategies.

On the same day that CBS snapped up the hipster online radio community last.fm for a relatively modest sum of $280m,, News Corp.'s online division, Fox Interactive, itself bought up two more social networking sites: the online photo organising site Photobucket and Flektor, a site that lets users create mashups, slide shows and other presentations of their user-generated content.

The two unknown-value deals will give News Corp.'s social networking sites, namely MySpace, another way of trying to monetise its still-growing user base.

Both sites are already popular with MySpace users who use them to incorporate graphics on their pages, so in a sense it was a matter of solidifying a relationship already in place.

It will mean that Fox will be able to embed the functionality of Photobucket and Flektor directly into its own site, which will make the experience easier for users.

But more importantly it helps the company consolidate any traffic that might be passing through Photobucket's and Flektor's services for its own financial gain.

This in fact was a touchy subject between Photobucket and MySpace only weeks earlier. MySpace had started blocking Photobucket usage when it said the image sharing site was using its service to encourage users to run ad-supported slideshows on their pages.

Now that MySpace owns the two sites, any potential ad revenue gained in such a way will be theirs to keep.

According to Fox, the two products will continue to operate as standalone entities and will still be able to be used on other sites like YouTube and Facebook.

(For a closer look at the Last.fm deal with CBS, you can read a blog entry I wrote on the day of the deal. There will also be a longer analysis, including an interview with one of the Last.fm founders, in the upcoming monthly issue of TC+M, out in two weeks).

Burritos in China
Saw an interesting item on the wires today about how Grupo Televisa, the largest broadcaster in Mexico, has done a deal with the Chinese government to export its reality TV shows and soap operas to the Mainland. Chinese broadcasters, like broadcasters in many other parts of the world, already dub Mexican programmes for their market, but this deal will let Chinese producers recreate the various shows for their own market.

The terms of the deal were not disclosed. But what stands out about this to me is that despite the huge potential of the Chinese market, there seems to be a distinct dearth of content to fill the airwaves.

Back in Mexico, the Chinese government broadcaster CCTV will be providing a feed of its channel to Grupo Televisa, who will deliver it in its domestic market dubbed.

The two countries of China and Mexico may have more in common than previously thought, in addition to their tastes for telenovelas and raucous variety shows with mariachi bands. This week, the high court in Mexico struck down a ruling that effectively lets the country's two dominant TV companies, Grupo Televisa (70% of the market) and TV Azteca (30% of the market), to continue to stay on top. In fact, the CCTV deal shows that today there is an opening for smaller new channels to emerge, but it takes a deal with a big player to make it happen. Perhaps in the future you won't need a tie-up with one of the big-two to do this.

The week in review

originally posted last friday on www.totalcontentandmedia.com....

It’s a testament to the current market dominance of Google that every day seems to bring a new story about the company. This week the news flow included items on Google ads in video games, on billboards and music videos; Google partnering with the BBC; Google accidentally releasing user data; and Google on top in searches, again (it will report its figures on the 31st so next week is bound to contain more stories).

But more interesting, I thought, was the news coming out about its competitor-in-chief, Yahoo.

After a burst of dealmaking at CES earlier this month, things have taken a dimmer turn. The week didn’t start off too well, when on Monday a story emerged that Didier Lombard, the CEO of France Telecom, said that the operator was considering ending its Yahoo contract and potentially trying to develop services themselves. France Tel is one of Yahoo’s biggest customers in Europe and uses Yahoo advertising products on its Web portals. Even if we don't know the actual terms of their agreement, it's high profile enough to be a problem for Yahoo, which is trying to win lots of new customers in the telco space.

Things didn’t get any better when Yahoo reported that net profit was down 61% on 2005—largely because of one-off investment gains last year—and revenue rose a mere 13%, to $1.7bn from $1.07bn in the fourth quarter last year. To compare, online business competitor Ebay reported net income growth of 24% on the back of similar revenues of $1.72bn. To further Yahoo’s regional woe in Europe, the MD for the area said growth in the UK market, one of its biggest worldwide, is likely to stagnate. Suddenly that exclamation mark they use starts to look especially out of place, doesn’t it? Yahoo!

Yahoo tried to make up for any further grumblings, about its new ad system or anything else, by announcing that it would actually be coming on line earlier than originally promised.

The silver lining to all this seems to be that Yahoo’s joint venture in Japan with Softbank is still coming up strong, reporting a 20% rise in profits over the same period last year. There, a big appetite for online shopping seems to be offsetting stagnating growth in search advertising.

Japan made some other notable appearances this week. The European Commission released its latest report on the digital economy. Online revenues in the region will grow to E8.3 billion by 2010, it forecast, but Europe will still lag behind the US and Japan, where people have proven to be tech crazy. Plus, the connectivity that people are getting both for at-home Internet and on-the-go wireless massively outpaces developments in Europe.

As a juggernaut, however, nothing can compare to China. This week, the country’s ministry of information industry said that Internet users grew 23% to 137 million. In a country with a population of more than 1.3 billion, the potential is still largely untapped.

Back in Japan again to note that Nintendo, the games company, has reported that it’s reached its full-year profit targets in nine months, underscoring how aiming modestly can sometimes pull off magnificent results, particularly compared to its rivals in the games area, Sony and Microsoft. While the Wii was largely written about as a simpler, cheaper new games console compared to its competitors, Nintendo clearly wants to bring its own stamp onto the idea of convergence, launching a news service that can be accessed through an graphic map, a Wii player, a broadband connection and an Opera browser.

On the subject of Nintendo's game's competitors, Microsoft had some bad news this week: a drop of operating profit (tho still profitable!). In the area of new products, AT&T pointed its finger at the software behemoth for ongoing glitches in its IPTV services.

Endemol sell-off buzz continued to be pushed out this week, with rumours that Disney is interested in bidding for the company in the same consortium that includes the company’s founder John de Mol. Such a buy would secure Disney a major producer of reality TV and game shows, which have so captivated audiences around the world (and cost relatively little to put together, and definitely less per episode than an instalment of Lost).

No one has brought up whether Disney would come up against any shareholder problems stemming from how some of the Endemol shows’ content might conflict with its corporate image of offering family entertainment.

News Corp. is another big media player rumoured to be interested in taking a stake of Endemol, but the company has denied interest. One other M&A play the company hasn’t ruled out, though, is throwing its hat into the ring for the Tribune Group in the United States. According to reports, News Corp. would buy almost only for the purpose of consolidating operations between Newsday and the New York Post, two Big Apple dailies that are not keeping analysts happy with their numbers. I wonder if they might also be a little interested in some of their television stations and maybe a sports team or two?

Indeed, the connection between how sport can be used to drive media domination is one that Murdoch has played to perfection in other markets, namely the UK and Asia. Now in the latter market, sport is being used again to try to grow a business—this time around it’s HDTV. It looks like it will be a challenging game, though: so many people get their content through free pirated signals that some think it will be hard to get companies to ramp up investment in costly HD services that have little chance of being sold.