* Levinsohn's elevation emphasizes Yahoo's media power
* Expected to lay out new strategy for company within weeks
* Top lieutenant Mickie Rosen given control of content and
By Joseph Menn
SAN FRANCISCO, May 22 With two of its most
distracting conflicts resolved in the past week and a half,
Yahoo Inc <Y HOO.O> ho pes its new interim chief executive can
focus on the biggest challenge of all: turning the company into
a digital entertainment destination that wins back the
advertising dollars flowing elsewhere.
While ousted predecessors Scott Thompson and Carol Bartz
were seen as technologists, Ross Levinsohn has managed Internet
efforts at such mainstream media companies as CBS and Rupert
Murdoch's News Corp.
Those close to Levinsohn said he is committed to building
out Yahoo's own video programming and striking more syndication
deals in pursuit of ads that command a higher price. In one sign
that Yahoo is thinking of itself as more of a media company than
a technology company, Levinsohn will continue to live in the Los
Angeles area instead of decamping for the company's Silicon
Valley headquarters, according to a source familiar with his
"Levinsohn is a media guy, and our business model is selling
display advertising," said another Yahoo insider. "His elevation
makes clear we are a media company now."
Yahoo elevated Levinsohn on May 13 -- the same day it
settled a dispute with Daniel Loeb, giving the activist investor
three board seats. On Monday, Yahoo inked a deal to sell half of
its stake in Alibaba Group back to the Chinese e-commerce giant
for more than $7 billion, monetizing Yahoo's biggest asset after
years of fractious talks.
Levinsohn, 48, declined interview requests but has told
staffers to expect more on his strategy within weeks.
Longtime company insiders said that while Yahoo has a hard
road ahead of it, the resolution of the two battles and
Levinsohn's strength in advertising give the company a better
chance than it had under Bartz or Thompson, with the latter
resigning after Loeb revealed that he didn't have a claimed
undergraduate degree in computer science.
Industry executives and Yahoo investors said that Levinsohn
has few viable alternatives other than reorienting Yahoo around
media and advertising.
"When you have a turnaround situation, particularly an
Internet turnaround situation, there are only a very few ways to
solve the puzzle," said current News Corp Chief Digital Officer
Jonathan Miller, who co-founded a venture capital firm with his
friend Levinsohn six years ago. "In Yahoo's case, some of the
slots you might think to take are already taken -- being a
leader in the social space is taken, and being No. 1 in search
is occupied. They aren't going to be the mobile platform."
"One of the things that is open and fits is digital media. I
think it's the one (slot) that Yahoo has to occupy, and Ross has
the background, the orientation and the skills to take the lead
in that category."
Though generic display advertising has lost favor to
search-based ads and other more interactive formats, it still
generated $12.4 billion in U.S. industry revenue last year and
should produce $15.4 billion in 2012, according to eMarketer
analyst David Hallerman.
Yahoo's share of that has been slipping, however, as
advertisers turn to Google, Facebook and others.
Hallerman projected that Yahoo's display advertising share would
decline to 9.1 percent this year from 10.8 percent in 2011.
Video ads are more promising. They made up only 6.3 percent
of all U.S. online advertising dollars last year but are growing
more than 50 percent yearly.
Therein lies the reason Levinsohn has been frantically
inking new deals to show original content from ABC News and
established Hollywood stars creators such as Tom Hanks and Ben
Stiller. Yahoo now claims 21 of the 25 most-watched Web series,
and in the first quarter eked out a 1 percent revenue increase,
the first year-over-year gain since 2008.
"If you think of content creation in a line from the free
user-generated stuff to the most expensive, like the Netflix
content you pay for, Ross' vision is to move up as high as they
can go on free and ad-supported, because scale matters," said
one of Yahoo's largest shareholders, who declined to be
identified because the investor does not speak publicly on
holdings. "I thi nk he's right about that."
Raised in suburban New Jersey, Levinson graduated from
American University in Washington, D.C. and served as a young
executive at media and tech properties including early search
engine AltaVista and CBS SportsLine, where he was early to pick
content aimed at fantasy sports league players.
Prior to his appointment at Yahoo, Levinsohn was best known
as the man who brought a still-young MySpace to the attention of
News Corp Chairman Rupert Murdoch, who spirited it away
from the outstretched arms of rival media baron Sumner
Though the $580 million price was derided as exorbitant,
Levinsohn soon negotiated an advertising pact with Google that
guaranteed News Corp a minimum of $900 million over three years,
bringing both instant profit and acclaim to Murdoch, who was
heralded as the one old-school media mogul who understood new
But MySpace soon fell into an epic downward spiral that
ended last year in a sale reportedly worth $35 million, about a
third of a thousandth of what Facebook was worth when it went
Levinsohn, for his part, was around for almost none of the
MySpace collapse and gets little blame from former colleagues.
Levinsohn was strong enough at internal politics that he
survived for six years amid the intrigue at Murdoch's court, but
was disadvantaged because he reported to News Corp's then-Chief
Operating Officer Peter Chernin while MySpace founder Chris
DeWolfe spoke directly to Murdoch, who became enamored with
DeWolfe and his partner Tom Anderson, coming to see them as
visionaries who could do no wrong.
With Murdoch's full support, DeWolfe and his team were able
to successfully resist some changes Levinsohn wanted, and as
innovation at MySpace stalled Levinsohn decided to leave News
Corp, joining Miller at venture firm Velocity Interactive, known
later as Fuse Capital.
Levinsohn wasn't as good at early-stage investing as he had
hoped to be, said a third partner from Fuse, Keyur Patel. Only a
few of the companies Fuse backed have been sold, and none have
"There were very high-risk deals," Patel said. "None of
those companies were a big hit."
Former underlings said Levinsohn is slow to anger and has
embraced the element of News Corp culture that prizes personal
loyalty above short-term performance.
Since joining Yahoo in 2010, he has overseen the acquisition
of one Fuse creation, advertising technology company 5 to 1, and
brought aboard his friend and co-founder there, News Corp
veteran James Heckman.
He also hired another News Corp survivor, Mickie Rosen, who
went on to found a price-comparison service called Tecca, which
Fuse also backed.
Just days into his new role, Levinsohn told employees that
the well-regarded Rosen would assume responsibility for content
and business deals.
In addition, he gave Rosen control of Yahoo's fledgling
effort to handle consumer transactions, which his predecessor
Thompson -- a former PayPal president -- had set up on its own.
Ever the diplomat, Levinsohn disparaged neither the
initiative nor Thompson, even though the latter was seen
internally as a destructive force.
"Commerce is a significant opportunity for growth,"
Levinsohn wrote to the troops. "In order to thrive it needs to
be woven throughout the Yahoo experience and close to our major