Yahoo! in old media search

Apr 9, 2001  •  Post A Comment

After years of turning up its corporate nose at old media, Yahoo! is reaching out to a group of seasoned entertainment executives to fill its top spot.
Sources said that among those who have been contacted for the CEO job at Yahoo! are Jeff Bewkes, CEO of HBO; Tom Evans, CEO of OfficialPayments.com, (and the erstwhile CEO of GeoCities and a former publisher of U.S. News & World Report); Michael Lynton, president of AOL International (and the former president of both Hollywood Pictures and Disney Publishing-Magazines and Books); Tom Rogers, CEO of Primedia; Jeff Sagansky, president and CEO of Pax TV; Scott Sassa, president of NBC Entertainment; and Strauss Zelnick, former CEO of BMG North America.
Some of these executives have indicated they’re not interested in the job, the sources said.
In pursuing these executives, Yahoo! is clearly emulating AOL, which hired old media maven Bob Pittman as its president in 1996 and saw its fortunes hugely improve.
In past years, Yahoo! has rejected suggestions that it had anything to learn from traditional media companies.
Yahoo! startled many in the business world when, on March 7, company Chairman and CEO Tim Koogle said he was stepping down from the CEO post-though he will retain his chairman responsibilities.
A Yahoo! spokeswoman refused to comment about the hunt for new executive talent, beyond saying, “We are pleased with the progress of our CEO search.” But privately, some Yahoo! executives admit they were wrong to eschew traditional media culture in the past.
Yahoo! and its executive recruiter, Spencer Stuart, have already ruffled a few feathers in the top ranks of entertainment. One candidate contacted by Spencer Stuart Managing Director Jim Citrin, who is conducting the search, said he was told that Yahoo! is contacting the “top 30” executives in the media and entertainment industry in an effort to find the correct candidate.
This executive notes that an approach like that is bound to fail. “The way you recruit people is you call the guy up-this is how everyone else does it-and say, `We think you would be great for this. Are you interested?”’
The approach Spencer Stuart has taken seems to indicate a lack of familiarity on the part of Yahoo! with the media world in general and the people who run it in particular, media executives said.
In an odd twist, Chicago-based Spencer Stuart also posted the job on the home page of its Web site (www.spencerstuart.com), with the description as follows:
“The ideal candidate will be a smart, creative, passionate, flexible and experienced senior executive who has a successful track record growing a diversified global business with at least $1 billion in revenues, who can work closely with the current management team, including Chairman and current Chief Executive Officer, Tim Koogle. Yahoo ranked as the 38th leading consumer brand worldwide, serves over 180 million individuals each month globally via its diversified Web network including 24 world properties. Yahoo has offices in Europe, Asia-Pacific, Latin America, Canada and the United States. The company headquarters are in Santa Clara, Calif. If you believe you are the right Yahoo for the job, please send your resume to our confidential e-mail: YahooCEO@spencerstuart.com.”
The wording of the job description seems to imply that the new CEO will be second-guessed by the old one, which is not an optimum situation in a company with as established a corporate culture as Yahoo!
Furthermore, with the Internet industry in free fall, one media executive was nonplussed by the line, “If you believe you are the right Yahoo for the job … .” “Imagine telling, with a straight face, someone like Scott Sassa that he’s the `right Yahoo for the job,”’ the executive commented.
For years the team at Yahoo! was known for its tight-knit camaraderie and fierce dedication to its unique way of doing things. Tom Evans, whose company GeoCities was acquired by Yahoo!, exited the company quickly after realizing that Yahoo! was not interested in the experience he brought to the company. That Yahoo! is now imploring him to return speaks volumes about the quandary Yahoo! finds itself in.
Mr. Evans had built a team at GeoCities that included Steve Hansen, the former chief financial officer of Universal Studios, and former Disney executive Michael Barrett, who had far more experience in ad sales than Yahoo! sales chief Anil Singh, who recently resigned. All left the company with Mr. Evans after they were offered lower-level positions. A Yahoo! attempt to acquire eBay earlier this year fizzled after the company insisted that eBay’s talented CEO, Meg Whitman, report to Yahoo! Chief Operating Officer Jeff Mallett.
Yahoo! has already signaled its willingness to recruit traditional media talent. On March 20, the company announced it had hired Gregory Coleman, former president of U.S. magazine publishing at Reader’s Digest, for its top ad sales position, replacing Mr. Singh.
While the CEO job at Yahoo! would have been hugely tempting a year ago when Yahoo! stock was flying high, recent events have tempered the enthusiasm. Still, Yahoo! staged a bit of a comeback in the public markets last week, and Lehman Brothers analyst Holly Becker raised her rating on Yahoo! to “buy” and shares rose to about $15.
“A new, outside CEO may be more open to change and objective about selling the company,” Ms. Becker wrote. “For traditional media companies such as Viacom, Disney, News Corp., or Vivendi, an acquisition of Yahoo! would provide an instant solution to their Internet strategy dilemmas. No doubt they are all looking keenly at AOL’s positive impact on the combined company’s growth and wondering what to do about Yahoo! Obviously, for anyone who buys Yahoo! it would not be without challenges (or dilution). However, once Yahoo! is snapped up, there are no more stand-alone consumer Web properties of a size that would make sense as a partner for these major media companies. At current levels, the valuation is probably as attractive as it will get.”
One strong incentive for a media executive to take the job, even with all the potential pitfalls, is the strong possibility for a huge personal payout. If Ms. Becker is right, Yahoo! could be acquired by a big media company in the next few years.
With Yahoo!’s market cap now down to $7 billion or $8 billion, the company could be attractive to some potential acquirers, even with its present woes. And one candidate noted that Yahoo! is signaling that it would let the new CEO build his or her own team. Yet, this candidate also noted, Yahoo! stock is down more than 90 percent from its year-ago high, and building it back up would likely be a difficult task for even the most dedicated and talented CEO, no matter how flexible the new Yahoo! has become.