Sinking the ship and jumping overboard: Is the end of the Yahoo7 venture what Seven needs?

Seven’s sale of its Yahoo7 stake was predictable, but was it smart? Zoe Samios looks at both companies and assesses whether the split was exactly what they needed.

And so the plot unravelled: Seven sold its stake in Yahoo7, effectively ending one of the last international media joint ventures in Australia.

After one bizarre press release, redundancies across the business and the final exit of a number of key executives, it’s now more or less over. Yahoo7, as it once was, is effectively redundant. Oath will now be the sole owner for Yahoo7 – if it will even be called that – and Seven will return its focus to its publishing assets, West Australian Newspapers and Pacific Magazines, as well as its revamped video streaming service, 7Plus.

Yahoo was acquired by Verizon last year, which case doubt over the future of the partnership with Seven West Media

It was a predictable decision by Seven. Yahoo, which was once described as the “global content leader” by Seven West Media chairman Kerry Stokes, had become a sinking ship locally, with staffers grappling for a lifeboat to return to the mainland.

Of course, that ship was sinking largely because Seven gutted it well before its final journey, but is the broadcaster’s decision to put an end to this joint venture better for both parties?

Seven and Yahoo partnered for the first time in 2006. At the time, Nine and Microsoft were well established in their joint venture, Ninemsn, which launched in 1997.

There was also another party involved: AOL.  The business was running the streets in the 1990s handing out floppy disks hoping people would take them and download its search engine.

AOL also had its hands in the pockets of Seven before Yahoo, launching a joint venture called AOL7. The partnership was unsuccessful with AOL and Seven selling the venture to Primus Telecommunications in 2004.

It made sense. An up-and-coming technology giant partners with a content company to build its presence and expand its search engine capabilities.

Jump forward to 2013 and Nine bought Microsoft out of the joint venture. The plan? Create fully owned digital properties in nine.com.au and other verticals such as 9Honey.

To 2017, and Verizon – which has owned AOL for two years – completed the acquisition of Yahoo. That sale saw Verizon combine AOL and Yahoo to form new company Oath.

Shortly after that acquisition, Seven West Media’s chief digital officer Clive Dickens revealed Seven would rip out its long-form video platform, Plus7, and establish a platform of its own, 7Plus.

Seven pulled its streaming platform from Yahoo7 at the end of last year

When Seven committed to 7Plus, it effectively ripped cut off Yahoo7’s life support.

Without the long-form video platform and the exclusive content of Pacific Magazines, Yahoo7 had little point of differentiation. All that was left was 7 News’ content.

And so far, there hasn’t been decision from Seven about where it will house its video news content.

But Seven’s decision is savvy, should the media company wish to maximise its revenue from all digital assets.

Since 2014, Yahoo7’s revenue and profit have been under pressure, in part due to the ongoing weakness in online display advertising. In 2016, 10% of the company’s workforce was cut.

According to the fiscal year 2017 results, revenue had fallen from $106.9m in 2013 to $77m, while profit fell from $19.721 in 2013 to $10.6m.

Last year, Seven West Media also wrote down the value of its joint venture by $75.5m, attributing the decline to a shift from display to programmatic advertising.

When looking at Yahoo7’s revenue and profit figures, and a struggling Seven West Media, it’s no surprise Seven has returned its focus to its own entities.

The final details of Yahoo’s acquisition by Oath will not be disclosed until August but a number of questions remain.

Will Yahoo7 continue to plug 7 News’ content? Or will Seven rip this out too? If so, what will be left of Yahoo7 and what will it be called?

And as for Seven, what will its digital strategy look like? As it stands, it still has 7 News on the Yahoo7 platform. If they take it back what will they do with it? Would it merge its publishing assets WAN and Pacific Magazines as well as the short-form video of 7 News and create a seven.com.au rival to Nine?

Unlike its commercial rivals, Seven West Media owns two sizeable publishing businesses. A one-stop digital shop for all content could be the way to go.

And if Nine is anything to go by, when done right, that strategy works well.

For Seven, this decision could be exactly what the company needs to bounce back from one of its tougher years in recent memory. There’s no need for an investment in a joint venture they’d made redundant, which in turn allows for increased investment across other assets, and the potential to successfully run owned and operated entities.

And that’s despite Dickens’ comments three weeks ago when he told me owned and operated entities were “just a press release”. “Owned and operated entities” is essentially what has been created.

In the same interview, he described his pivot away from Yahoo7 as a strategic move away from being “over reliant” on a single investment.

He also said the audience was much bigger and revenue was larger with his current strategy of running its own entities separately.

But he also mentioned scale. Without the international presence of Yahoo, Seven may have an issue with this. Though they might not need it. With publishing companies that cover both news and lifestyle that already have loyal audiences, reach may not be Seven’s focus anymore. After all, advertisers are more focused on the quality, not quantity, of viewership.

Regardless, Seven wants to own its own digital assets.

It wants direct-to-client relationships. It wants advertising revenue that it doesn’t have to share that with another business. Separating allows this.

But what might Oath gain from this? That all depends on the size of investment they are willing to put into Australia.

Oath is also HuffPost’s new parent company which means in Australia, the company now has two fully owned publishing assets, Yahoo7 and HuffPost despite the fact there’s only a skeleton of the two publishers left.

Oath will now take full ownership of Yahoo

Its only other Australian asset is One by AOL, an advertising technology solution that connects publishers, advertisers and consumers. But globally its assets expands to Gemini and Brightroll, which power the Yahoo7 sales ecosystem. The company also owns TechCrunch, Makers, Tumblr and Build series.

With HuffPost, Yahoo7 and One by AOL, it could effectively establish a business on its own. Combined with its international digital content platforms, these assets would allow for a content sharing play. But it appears new Oath managing director Paul Sigaloff is in charge of a native content and data business, given the majority of content has been stripped from Yahoo7.

Plus, if something like Gemini is of interest to advertisers, it was limited by the media company it was partnered with. Now, this won’t be the case.

In a statement provided to Mumbrella, Paul Sigaloff, Oath’s managing director for Australia and New Zealand, said the new ownership is a “huge step” and will bring “exciting changes to the company”. New products and brands are expected to enter the market under the Oath brand.

Paul Sigaloff was promoted as Oath’s managing director ANZ, with the responsibility of defining what Yahoo will look like in Australia

“I’m looking forward to sharing my leadership team and strategic plans over the coming weeks. We now have an amazing opportunity to boldly launch Oath’s market-leading range of consumer, advertising and publisher products in this market,” Sigaloff said.

Oath also hinted it has plans to grow to two billion users by 2020, with Australia and New Zealand as key growth markets.

For Sigaloff, his new role will be defining that business and what it stands for, away from Seven.

So in the end, that ambiguous press release had some meaning after all. Seven will finalise this deal and walk away with its own assets, leaving Yahoo7 – whatever it will be called – on its own to find new partners.

But Yahoo7 as it was is gone.

Let’s just hope that the ship that sails into the distance pays off for both those who jump overboard and those who held on tight.


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