Will Renewing 'Community' for Season Six Make Yahoo! a Streaming Power?

Sony Pictures Television made headlines when it struck a deal with Yahoo! to bring "Community" back for a sixth season. How will this deal help the two companies?

Jul 9, 2014 at 7:00AM

Six seasons and a movie. This has been a rallying cry for the "Community" fan base through all of the show's struggles. It hearkens back to Abed yelling the phrase in season two after being told that "The Cape" was going to last only three weeks. The prediction concerning "The Cape" was wrong, of course -- the show managed to get 10 episodes on the air before Comcast's NBC canceled it. Could it be true regarding "Community" itself, though?

When NBC opted not to bring "Community" back for that all-important sixth season, the hopes of fans rested on streaming service Hulu, a joint venture owned by Comcast, Walt Disney, and Twenty-First Century Fox. Contractual issues made it nearly impossible for other major streaming players such as Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) to pick the show up, so the Hulu option seemed like an all-or-nothing opportunity. Unfortunately, Hulu passed on the show as well.

Then, out of the blue, Sony's (NYSE:SNE) Sony Pictures Television unit, which holds the rights to the show, and Yahoo! (NASDAQ:YHOO) announced that "Community" would get its sixth season after all. Instead of appearing on one of the major streaming services, the sixth season would be an exclusive for Yahoo! Screen, the company's small-but-growing streaming component. While this is great news for the fans who will get more "Community," what does it mean for Sony and Yahoo!?

All eyes on Yahoo!
So far, Yahoo! Screen hasn't gotten a lot of attention. Bringing "Community" to the service could change that. Not only would the service see more traffic from "Community" fans -- who may start watching other shows there as well -- but it's also getting a solid round of press coverage just from picking up the show. Another press run will likely happen once season six actually airs, potentially bringing in new viewers who aren't part of the core "Community" fan base.

Yahoo! Screen was created in 2011 as a rebranding of the older Yahoo! Video service, which had at one point attempted to compete with Google's YouTube. The rebranded service premiered with eight original series in addition to licensed content from various providers. Unfortunately, this content never proved popular enough to set the service apart, while Netflix and Amazon rose to prominence in the streaming market.

It can be difficult to compete against providers with such a large market share, especially with Hulu keeping Yahoo! Screen out of the top three. A show such as "Community," which comes with its own installed fan base, could provide a solid boost to the service's viewership, giving it more solid footing from which it can grow a larger share of the streaming market.

Sony's biggest benefit
Sony stands to benefit from bringing "Community" to Yahoo! Screen in several ways. Most directly, Sony will have additional content that it can sell on DVD and Blu-ray once Yahoo! enjoys a period of exclusivity for the new season. This is in addition to the payment that Sony received in the terms of the Yahoo! deal. These earnings may not be the biggest way that Sony benefits from the new season of "Community," however.

Sony Pictures Television has been working to spread its ventures out across multiple channels and platforms, and the deal with Yahoo! gives it another platform to expand on in the future. The studio has created content for networks such as NBC and ABC, Sony's own Crackle.com, and even Netflix and Hulu. If Yahoo! Screen begins to grow in popularity as a result of the "Community" deal and similar content initiatives, it could provide an excellent growth opportunity for Sony's diversification efforts.

Six seasons and...
If the sixth season of "Community" does well on Yahoo! Screen, it could have benefits for both Yahoo! and Sony. It could also wind up being just the beginning of a business relationship between the two, with additional seasons (and maybe a film?) coming in the future. Even if the sixth season of "Community" is the end of the show, Sony Pictures Television will likely be open to creating future exclusives for Yahoo! Screen as it continues to hedge its bets across multiple content platforms.

It's deals like "Community" that have your cable company scared
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John Casteele has no position in any stocks mentioned. The Motley Fool recommends Yahoo. The Motley Fool owns shares of Yahoo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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