Brought in on a four-year contract to save the once-great Internet giant, Bartz has proven to be anything but an innovative executive
Yahoo recently approached Hulu about possibly taking over the popular video streaming site, the Los Angeles Times and Wall Street Journal both reported last week, citing anonymous individuals "with knowledge of the matter." Michael Arrington's unsolicited source called the story "BS" and, just a few hours after the Times' report hit the Internet, the rumors died down. But not before dozens of blogs and news sites picked up the story.
In the wake of AOL's purchase of the Huffington Post for more than $300 million earlier this year, and in a world where hundreds (thousands?) of Silicon Valley startups are vying for press coverage and funding, any talk of acquisition by a major media company elicits excited responses. This story was especially thrilling because Hulu, with tens of million of visitors every month, is one of the fastest-growing Internet properties. And it's one that has figured out how, with a variety of options for both advertisers (clip length, medium of distribution, audience) and viewers (subscription-based content, free access), to monetize its content -- and in a big way. In 2010, the site brought in more than $260 million in revenue; it's currently on track to hit half a billion dollars this year.
Yahoo, on the other hand, has weathered misstep after misstep for more than a decade. Founded early and grown aggressively, the company was able to pile away enough cash to get it through the tough times. But nobody can survive a never-ending storm, which is why Yahoo's desperate board brought in Carol Bartz in 2009. At that point, the company's stock had been falling for nine years since peaking in 2000. Instead of making a name for herself as Yahoo's savior -- this could have been her final lap in a long and successful career in the tech sphere -- Bartz has been scorned, convincing shareholders and the public alike that she's only capable of cutting costs and laying off staffers by the room-full.
To be fair, Yahoo needed to cut costs. The company was bloated after too many product and division launches during the boom years. But that's not all it needed. It needed a CEO with an innovative vision -- something Bartz clearly lacks -- and a cocktail toast that is the envy of all others in the room. It needed a CEO capable of inspiring what little talent remained at Yahoo and pushing it to become number one in some space, any space; the only thing Bartz inspires in her staff, it seems, is fear.
And that's why Yahoo should buy Hulu. Even if the original story was "BS," we now know that Hulu's board is scouting around for prospective buyers. "The company's owners plan on meeting a range of likely buyers in the weeks ahead," according to Newsy Stocks, which has been tracking this story from the start. Hulu may have just been using the Yahoo story to let the world know it was willing to meet with any interested parties, to push up the price of a potential sale. But Yahoo should jump into the fray and put together the best package it can. Not only would that acquisition give Yahoo a recognized and profitable stream in Hulu, it would give them Jason Kilar, Hulu's CEO, who could transition into a new role as chief executive of the combined companies.
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Since she was named CEO of Yahoo in early 2009, Bartz has deepened her reputation as a heartless autocrat. Bartz, who may have been brought in primarily because of her ability to fire nearly 700 people at her previous place of employment, canceled holiday parties, forced vacations and axed hundreds of jobs. For this, she was awarded tens of millions of dollars as part of a pay package that included cash, stock options and more.
"There was a honeymoon period, but that's gone now," Sameet Sinha, an analyst with JMP Securities LLC in San Francisco told Bloomberg, talking about Bartz's first six months on the job. "I don't think people realized how deep the problems were at Yahoo."
Shareholders were upset with Bartz's decision to split the search business from the rest of Yahoo's divisions, but it shouldn't have been that surprising. Bartz has always talked about wanting to position Yahoo as a premier destination for news, sports and entertainment coverage. But that's a hard game to play, with a much more crowded field than the search industry. Yahoo is up against AOL and all of the other big media conglomerates in its fight to carve out a must-visit space in the news business. Bartz's focus, aside from not being original, could cripple the company even further as she trims away all of the other branches to focus exclusively on news. Now, she's stuck playing catch-up.
And that, too, has only won her more enemies. Last year, Yahoo's board felt compelled to give Bartz an anonymous vote of confidence. Trying to quash shareholder rumbling, the board said it was "firmly committed to allowing Carol Bartz to fulfill her four-year contract at Yahoo," according to Business Insider's Jay Yarow, giving Bartz another two years at the top.
"If Yahoo were to buy Hulu, we'd expect it to make Hulu CEO Jason Kilar CEO of the combined companies," Nicholas Carlson wrote at Business Insider. "Kilar is exactly what Yahoo needs: a founder type with product vision and bottom-line savvy. Another option would be Ross Levinsohn, who very well may be engineering this whole deal. Current Yahoo CEO Carol Bartz looks like she is on her way out."
Bartz still has about 18 months on her four-year contract, but it wouldn't be difficult for the board to organize a coup. While Bartz was brought in to make big changes and try and get Yahoo back on its feet, repositioning the once-great Internet portal as a growth company, the shareholders have never been enamored. And they've never been more willing to protect their investment.
Images: 1. Carol Bartz/Wikimedia Commons; 2. Jason Kilar/Hulu.
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