Yahoo, NBC in Content Sharing Deal

Yahoo Inc. (YHOO) has announced a content and promotional deal with NBC Sports Group, in line with its strategy of striking content-sharing deals with major media brands. The financial terms of the deal were not disclosed.

NBC Sports is the sports division of the NBC television network. The group broadcasts premier sporting events and a diverse array of programs, including the Olympic Games, the NFL, the NHL, MLS, Notre Dame football, the PGA Tour, the Triple Crown, and the French Open, among others.

Per the deal, Yahoo! Sports, which broadcasts premium sports news and events will be integrated into NBC Sports Group, expanding the company’s digital assets. Yahoo’s fantasy sports pages and its sites like Rivals.com, which focuses on college recruiting, will also be promoted on the NBC network. Additionally, Yahoo! Sports will be linked to live streams of NBC sports broadcasts and develop web shows with NBC that will appear on both websites.

However, the two sites will continue to be independent and maintain separate newsrooms and editorial control over their respective content. But they will collaborate on major sporting events on both television and the web, thus increasing visibility for each other with minimal investment.

The partnership is expected to benefit both companies over the long term. The alliance will broaden the reach of both the companies going forward. According to comScore, Yahoo! Sports came in second to ESPN in November rankings with approximately 40 million online users while ESPN had 42 million visitors. However, during the same month, NBC had only 11 million unique visitors, which put it into the #8 position. Both the companies expect that their traffic will be measured together, which will make them the No. 1 sports website in the United States.

Good content is vital for a company serving ads as the number of users it attracts is directly proportional to the ad revenue it generates. We believe that Yahoo will continue to pursue this kind of content sharing deals in order to boost its online user base going forward.

Yahoo already has a number of content sharing deals with companies like CNBC, Walt Disney’s (DIS) ABC Television Group, Spotify and Clear Channel. Though its new CEO, Marissa Mayer is focusing more on the company’s product developments, this partnership clearly indicates that Marissa is not ignoring other growth areas and is looking to protect Yahoo’s share in the display and video ad market.

Yahoo has come out with better-than-expected third quarter results with non-GAAP earnings up sequentially as well as year over year and exceeding the consensus estimate by 11 cents. However, a turnaround in the company’s business still remains a big task for the new CEO, given Yahoo’s declining position in display and search and the monetization issues related to Microsoft’s search platform. Yahoo also lags in several emerging segments, such as mobile, social and the cloud.

Currently, Yahoo has a Rank #3 (Hold). We note that its archrivals, Google (GOOG) and Microsoft Corp. (MSFT) also carry a Rank #3 (Hold) while Facebook Inc. (FB) carries a Zacks Rank #2 (Buy).

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