MSFT-YHOO: Special Newspaper Consortium Edition
By Rafat Ali - Sun 03 Feb 2008 07:18 PM PST
[Guest post by Ken Doctor, Content Bridges] Yahoo’s been piling up its own set of endorsements from newspapers over the last year. It has convinced newspaper chains of two things: 1) they needed a big brother with a big network of readers and the latest in search/ad technology; 2) that big brother is Yahoo (NSDQ: YHOO). With the newly ascendant Dean Singleton leading the charge, a core group of eight entered the Sunnyvale castle. Since then Yahoo has talked, literally, to every one of the rest and now 22 American newspaper chains (with more than 500 of the 1500+ American dailies) are within the gates.
So when Microsoft (NSDQ: MSFT) stormed those gates, formally and officially, Friday, among those parsing the hot breath of Redmond is the news industry.
Microsoft is a familiar, though often distant character, in the newspaper/Web saga. Publishers have made many a pilgrimage north, and Microsoft has offered uneven diplomacy of its own. Overall, the takeaway—from those Sidewalk/Netscape origins—has been one of suspicion. It’s been hard to walk away from Microsoft meetings without the sense your pocket has just been picked, or its hand is still in it as you depart town. Microsoft earned its early reputation as a “partner” who would pick your strategy clean, taking your experience into its IP, and then decide to go another way. It may have lived down some of that reputation more recently, but the sense persists.
So the news of the Microsoft $44 billion bid for Yahoo sent some shock waves through news industry corporate suites. Here they are, in the first year of marriage, and someone may have switched the groom. The signs that the groom may have been distressed were clear, my “Be Careful Who You Consort With” post of late January was among those that pointed that out. But still when the possible switch is announced, everyone finally takes the new seriously.
Here’s my beginning list of nine questions: More after the jump…
Do you hear the echoes of the Sidewalk era? Sidewalk was Microsoft’s push to get into local media in the mid-’90s. Its vision was right-on: becoming the dominant local online events site. Microsoft sent an early scare through the news industry, picking off some top talent, but it was too early in the game. Microsoft folded too soon, selling the remnants of the business to City Search. And don’t think Steve Ballmer hasn’t kept the foray in mind. Quoted in the New York Times (NYSE: NYT) last January:
“But Sidewalk was really aimed at what we now call local search,” Mr. Ballmer says. “Sidewalk is one we should not have gotten out of.”
In its heart, Microsoft still harbors dreams of being a media heavyweight.
Does the deal set back the clock? The newspaper industry hears the ticking of the clock louder each year, with each new year less friendly than the old. The increasing volume has been one prime reason the companies ceded some autonomy to get at Yahoo eyeballs and technology. But given that this deal would take 6-12 months to get finalized and integrated—and that’s really optimistic—the payoff to publishers in traffic and revenue would only be further set back. Alan Mutter agrees on that point and discusses the consortium angle here.
How will newspapers exercise any change-of-control clause they have in the consortium contracts? At least some of the players have them, giving them a bit of leverage to renegotiate with Microsoft/Yahoo and/or Google.
Would the newspapers like to buy or buy into the HotJobs business to get equity as well as shared functionality and network scale? If Microsoft would be serious in redefining its technology provider/media owner equation, such a deal for equity could further cement relationships with these publishers around a still-essential vertical going forward.
Doesn’t the deal open up a new opportunity for the 22 newspaper consortium members to re-think, re-negotiate and reckon its deal with Yahoo? The consortium members have gotten somewhat more comfortable over the last year working with each other. Can they now step back and decide how better to share costs of marketing, sales and technology, working with one of the behemoths or contracting centrally—oh, Lord, is it finally time—to create the universal forward-reaching publishing platform all can use and grow on.
Won’t this deal help push further rationalization in the recruitment marketplace? Yahoo HotJobs has had the mojo over the last year. Monster’s been struggling along with the Gannett-Tribune-McClatchy-owned CareerBuilder. Yes, that CareerBuilder—in which Microsoft took a 4% stake last June. So the would-be tangled ownership stakes cry out for rationalization.
As recruitment becomes less and less a listings business and more and more a tech-driven matching business, it might make sense for tech/ad company—Google (NSDQ: GOOG) certainly comes to mind—to roll up Hot Jobs competition. Monster’s got to be available, and each of now-struggling Gannett, the New Tribune and a seeking-to-reduce-debt McClatchy (NYSE: MNI) all have reasons to sell. If they could sell a majority of the company, perhaps, retain some equity and preference in the product, we could see a new duopoly recruitment duopoly born.
How does the industry’s emerging new leadership deal with the deal? These are not the companies of Tony Ridder and Dennis FitzSimons we are talking about, but those of Dean Singleton and Sam Zell. Yes, I know the old Tribune’s not part of the Yahoo consortium, but as Sam’s said, everything’s on the table. When deals are in the air, you can be sure he’s looking for how he can profit in the movement. The Trib’s stake in CareerBuilder could certainly be part of the puzzle, but look for the new Tribune to look for other ways to advantage itself as these new chips fall. Remember the recent deal between Belo (NYSE: BLC) broadcasting for preference in Yahoo News? Well, Tribune’s will have 40 stations under its management with its recent Local TV moves, and needs some web boosts of their own, just as one example.
How busy this week will be David Eun’s partners team at Google in working the newspaper companies—those partnering around print ad and archive programs—to wiggle them loose from the consortium? Google’s had a history of being a less willing dance partner than Yahoo, but this is a new dance.
Where are the outliers as this deal gets done? Look who’s not in the consortium: the New York Times, Washington Post (NYSE: WPO), Gannett (NYSE: GCI). Three huge and hugely important companies that have maintained more independent strategies, partnering widely, but without getting into bed with Yahoo or Google or Microsoft, On their white boards, they have to anticipate the seismic shifts the new giants would set off and plan accordingly.
Posted in: Companies, Google, Yahoo, Media, Newspapers
