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Yahoo! Inc. (YHOO - Analyst Report) recently entered into a content sharing partnership with the leading business news television channel CNBC. CNBC is a division of NBCUniversal, of which a majority controlled by media giant Comcast Corp. (CMCSK - Snapshot Report).
The partnership immediately makes CNBC the leading content provider on the Yahoo! Finance page in the U.S. Yahoo! will also be providing content to CNBC. The companies will also jointly develop online videos to appear across both Yahoo! Finance and CNBC.com going forward.
The partnership is expected to benefit both companies over the long term. The alliance will broaden the reach of both the companies going forward. According to comScore, Yahoo! Finance had approximately 37.5 million online users in May, making it the #1 online business news portal. However, during the same month, CNBC had only 6.5 million unique visitors, which put it into the #11 position.
We believe that the partnership will expand CNBC’s web presence, thereby boosting its competitive position over other online business news sites such as Dow Jones, AOL, MSN, Forbes, Bloomberg and CNN. CNBC’s expanding television viewership (100 million in US and 395 million worldwide) is expected to boost Yahoo!’s growth story going forward.
We also note that CNBC has a strong presence in the emerging markets of the Asia-Pacific, particularly China, where Yahoo! is practically non-existent. Therefore, the partnership will further expand Yahoo!’s presence in the Asia-Pacific and will help it to bolster its position in China. Yahoo! already has a partnership with Nokia Corp. (NOK - Analyst Report) in the region.
The increasing penetration of both the companies is expected to drive advertising sales going forward. CNBC will lead the advertisement sales for the new online shows, to be primarily telecasted on its business news channel. Both the company’s will share the advertising sales revenue (sharing ratio was not disclosed) going forward.
We believe that Yahoo! will continue to pursue this kind of content sharing deal in order to boost its online user base going forward. The company already has a number of content sharing deals with other companies including Walt Disney’s (DIS - Analyst Report) ABC Television Group.
Yahoo has lost almost 65% of its value since its 2006 peak and has been struggling to improve its financials and build shareholder confidence. But the company has failed to turn around and is facing management turmoil following the recent dismissal of its third CEO in just three years.
The company is fighting the likes of Google Inc. (GOOG - Analyst Report), Microsoft Corp. (MSFT - Analyst Report) and Facebook Inc. (FB - Analyst Report). However, despite its struggles in the recent past, partnerships of this kind are likely to boost investor sentiment.
We have a Neutral recommendation on Yahoo! over the long term (6-12 months). Currently, Yahoo! has a Zacks #2 Rank, which implies a Buy rating in the short term (1-3 months).