Yahoo! revives idea of Internet resembling TV

By Chris Gaither
Los Angeles Times

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People familiar with the discussions say Yahoo! is pressing entertainment-industry producers and talent agents to start pitching new shows and short films that the Internet giant could license for viewing online. No longer satisfied to simply repackage film trailers and TV clips, some Yahoo! executives believe the surge in broadband connections means the Internet may finally be ready to operate more like a television network, these people said.

Since taking the reins in 2001, Yahoo! Chief Executive Terry Semel has compared the company to an early-day cable network. HBO, for example, started in 1972 by showing movies months after they left the big screen, but it's now best known for its homegrown shows like "The Sopranos."

Yahoo! spokeswoman Joanna Stevens declined to comment on the company's plans, calling the discussions with Hollywood officials "purely exploratory."

The shift toward developing original programs was underscored last week by the announcement that Sunnyvale, Calif.-based Yahoo! had hired former ABC television network Chairman Lloyd Braun to run its media and entertainment group in Santa Monica, Calif.

Braun himself hinted at the change. In an interview, he said he envisioned a programming "mosaic" composed of both content from TV networks, such as the NBC series "The Apprentice," and original material produced expressly for Yahoo!

"I already sense a tremendous appetite on the part of the creative community to access the Internet as a platform to distribute content," said Braun, who oversaw development of such hit shows as "Desperate Housewives" while at ABC. "There is an enormous amount that can be mined in the creative community here, and that's no question a part of what we'll be doing."

The business model is unclear, but Yahoo! is considering advertising and subscription fees to cover the cost of the programs, according to a person familiar with the situation.

Jim Moloshok, a former Warner Bros. executive who is Yahoo!'s senior vice president of entertainment and content acquisition, has been pitching the plan to agents and producers for nearly six months. Talent-agency executives expect to begin meeting with his new boss, Braun, shortly after he reports to work Nov. 15.

Yahoo!'s programming efforts would help set the company apart from its online rivals — especially Web-search pioneer Google. While Google is plastering billboards with complicated math problems to recruit bright engineers and reinforce its reputation as a haven for geeks, Yahoo! trumpets entertainment-industry hires such as Semel, a former Warner Bros. chairman, and Braun.

Yahoo! has offered TV-like programming before, only to retreat in the face of weak demand. Yahoo! Platinum, an online network of streamed sporting events and other television shows, was shuttered in late 2003 after people balked at paying $9.95 a month. In 2002, Yahoo! closed a 2-year-old programming effort called Finance Vision and attributed its failure to a weak online ad market and slower-than-expected broadband penetration.
 
Yahoo! thinks consumers will embrace its efforts this time. More than half of Web surfers in the U.S. have high-speed Internet connections at home, and people who use broadband spend much more time online than people who have dial-up connections.

Besides, Yahoo! needs to create more places to put ads. By luring customers with sports scores, news stories and other information, the company raked in $1.2 billion from online advertisers in 2003. Now the portal is running out of space for more ads and sponsorship notices.

Video ads that resemble TV commercials command even higher prices, and that could more than cover Yahoo!'s costs.

"If you do the spreadsheets, you can actually afford to do the content," said AtomShockwave CEO Mika Salmi, whose company licenses and streams short online films on the Web, including the popular political satires from JibJab Media. "There is serious money to be made if you have a large enough audience and attract the advertisers."

The strategy would protect Yahoo! if the TV networks decided to put more of their shows online themselves, said a person familiar with the talks.