Yahoo! (NASDAQ:YHOO) is getting cozier with the entertainment business, and the relationships it is building will help keep it the Web's marquee player.
A recent article in the Los Angeles Times reports that the online outfit's top entertainment executive, Jim Moloshok, is moving away from day-to-day management to concentrate exclusively on signing advertising and content deals with television and movie studios. That Yahoo! is focusing on the entertainment business is hardly surprising considering that CEO Terry Semel once led Time Warner's (NYSE:TWX) Warner Bros. and that Moloshok previously worked under Semel at that company.
But the Internet giant's interest in Hollywood is not simply a function of past relationships. As Semel himself noted in the firm's second-quarter conference call, research shows that the Internet exerts "enormous influence" on consumers' movie choices. In addition, with broadband use steadily expanding in the United States, entertainment companies have more options, including splashier ads and trailers that can help better build "buzz factor" for their offerings. Disney's (NYSE:DIS) Buena Vista Pictures, for instance, recently announced that it will debut a new interactive movie trailer on Yahoo! to market a new picture, National Treasure.
Nor is Buena Vista the only one turning to Yahoo! Moloshok recently sat down with The Hollywood Reporter and chronicled the company's rapid penetration of the movie business. In 2001, 17 films went to Yahoo! for marketing. By 2003, the number reached 131, and 2004 is on track to outpace that figure. While this is impressive, Moloshok also pointed out that amount spent per title has jumped considerably.
Some may grouse that Yahoo!'s recent second-quarter earnings were not as blowout as hoped and that the company's outlook is not eye-popping enough. But the firm is by no means resting on its laurels. As the rising tide of its movie business shows, Yahoo! continues to build multiple reliable revenue streams. It's understandable why the company remains a main attraction for investors.
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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
