UPDATED, 7:08 PM: Late in today’s post-earnings Yahoo conference call, CFO Ken Goldman said his company took a $42 million write-down in its video division, citing the revived Community along with fellow original series Sin City Saints and Other Space.
“With certain of our original video content, we couldn’t see our way to make money over time,” he told analysts. “I’m thinking of Community. I’m thinking of Sin City Saints and so forth. … We spent money and had some assets on our balance sheet. We elected to write those off. It actually helps us going forward in that we won’t have that expense going forward.”
Following in the streaming-originals footsteps of Netflix and Amazon, Yahoo picked up a sixth season of the Dan Harmon-created Community in June 2014. NBC had canceled the series the previous month, and Hulu had been sniffing around a possible Season 6 pickup of the Sony Pictures TV-produced show. New episodes of the college-set comedy starring Joel McHale premiered on Yahoo Screen in March, and by June, the company was in talks to pick up another season. Nothing has been set either way so far, but Goldman’s comments today aren’t exactly a ringing endorsement.
“In thinking through that [write-down], we thought about not only what is the cost, but also what does it cost to market and create the streams you need to make it successful. We’re not saying we’re not going to do these at all in the future, but in three cases it didn’t work the way we hoped it would work, and we decided to move on.”
PREVIOUSLY, 1:42 PM: Yahoo shares gyrated in post market trading today after the company reported that it fell short of analyst expectations for Q3 earnings — but forged an agreement with Google to help with ad sales.
The deal, which runs to the end of 2018, enables Yahoo to use Google’s AdSense, as well as Google’s Websearch Service, according to an SEC filing. The agreement is non-exclusive, which means Yahoo can also use its own or Microsoft’s search.
But Yahoo and Google have agreed to wait to give the Justice Department’s Antitrust Division “a reasonable period of review.”
Yahoo says that its deal provides it with “additional flexibility to choose among suppliers of search results and ads.”
The agreement comes as Yahoo disclosed that it generated $946.9 million in net income in Q3, down 6% vs the period last year, on revenues of $1.23 billion, up 6.8%. Analysts expected revenues to hit $1.26 billion. Adjusted earnings at 15 cents a share were two cents shy of the consensus forecast.
CEO Marissa Mayer says that the results were “largely within our forecasted expectations.” Heading into 2016 “we will work to narrow our strategy, focusing on fewer products with higher quality to achieve improved growth and profitability.”
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