ABC News has a powerful presence on TV, where stars such as Catie Couric and Barbara Walters have a huge following. The network, owned by Disney, has yet to reach commensurate scale on the Internet, though. Its online audience is 24 million unique visitors a month, compared with 55.6 million for number-four ranked AOL/Huffington Post, 56.7 million for number-three ranked MSNBC, and 75.3 million for number two CNN, according to comScore.
Recently ABC News sought to close that gap by teaming up with Yahoo, which had an audience of 81.2 million unique monthly visitors, according to comScore. The two organizations will expand an existing news collaboration that goes back to 2000 by combining news bureaus and online content, producing original news shows just for the web, and reporting their online audiences on a combined basis. The deal also gives ABC access to a struggling Yahoo’s still considerable capabilities in online advertising, which were strengthen on Tuesday when it announced it would buy New York-based Interclick, an ad targeting firm, for about $270 million.
The Yahoo-ABC News deal was launched as George Stephanopoulos interviewed President Obama live on Yahoo and ABCnews.com, demonstrating how the partnership plans to develop exclusive content for the web.
The companies declined to discuss financial aspects of the deal, although a Yahoo spokesman told Institutional Investor that “there is most definitely a revenue sharing agreement in place.” Yahoo will continue to work with other news partners such as the Associated Press. It also will continue to develop its own content.
Institutional Investor contributing writer Steve Rosenbush spoke with Joe Ruffolo, senior vice president of ABC News Digital, about what ABC hopes to get out of its expanded collaboration with Yahoo. Here are edited highlights of their conversation.
Instititional Investor: ABC already has its own web site, www.abcnews.com. Why not just concentrate on building that site?
Joe Ruffolo: We see this as much wider distribution for our talents and stories. You could watch George Stephanopoulos interview President Obama at ABC and Yahoo, and reach a combined audience of 100 million Americans. That is a big differentiator for us.
A large online audience doesn’t always lead to revenue. How will you make money from this venture?
There are great opportunities to monetize this deal. Our relationship with Yahoo opens up a new way to shift our television advertisers to the web. It also leads us through the upfront period, now underway (in the seasonal marketing of TV advertising.) We really think this is an opening to sell advertising across all media platforms. I think the ability to reach 100 million people online sets us apart from other news organizations.
Obviously, video is a growing phenomenon. We are going to be producing original video for the web. That is where the market is going.
What else does Yahoo bring to this deal, besides a large audience?
There is a very strong technology component to this deal with Yahoo, giving us a new ability to target stories to our audience. The new Yahoo publishing platform is much faster and more nimble than where we are now, and that will be a big advantage for us. It gives us a greater ability to customize content for users. There are 40,000 different versions of the Yahoo home page. It also gives us a better ability to develop specialized content and wrap relevant advertising around it. The technology can help grow an audience and it is always better (financially) to deliver more targeted advertising.
Yahoo, which has faced investor dissatisfaction over its growth rate, recently dismissed CEO Carol Bartz, and the loss of numerous other top executives. There’s also talk that Yahoo might be acquired by private equity firms. Are you concerned that such instability will rub off on ABC News?
I look at the (recent Yahoo controversy) from the standpoint of the consumer. Consumers don’t care about what is happening within the company at the top level of management. Yahoo’s fundamentals are very strong. People come to Yahoo everyday for many different kinds of content. We see Yahoo as a very strong company and that is why we have confidence in Yahoo as a partner.
Looking ahead, do you see closer collaboration or even perhaps a merger of the ABC New and Yahoo sites?
We can always address that in the future. But we recognize that in the future content will live on many different platforms. We use Twitter and Facebook to communicate with our audience. We try to bring people home to ABC whenever we can, but we will continue to use different platforms.
