During Yahoo’s fourth quarter earnings call, new CEO Scott Thompson announced that he has ended a debate that long plagued the company: whether it is a technology/products company or a media company.”We need to do both,” he said.
“We end the debate about which is more important. We must do both.”
The truth is, that with that statement, Thompson actually re-ignited an already-settled debate and put the company on the verge of a civil war.
There are two narratives coming from Yahoo insiders about Thompson.
One is that he is a clueless nobody, chosen by a defensive board because he could be controlled.
The people with this view will laugh about how Thompson, who has zero experience in the media industry, doesn’t even know what a CPM or impression is.
These sources will sometimes even attack Thompson personally. One told us he is a “megalomaniac” who is so rude that he will begin meetings by belittling subordinates. Others say that Thompson is in a “bunker.”
“Apparently the board did no due diligence on the guy,” says one source with this view. “I can’t fathom why they hired him. There’s no relevance to the background of the business we’re running.”
This narrative comes from the media side of Yahoo’s business, where Yahoo makes 95 per cent of its revenues.
These people feel that a rug has been pulled from underneath them because for the past year, they have been telling outsiders that Yahoo is the “premiere digital media company.” They thought the debate was settled.
The other, almost diametrical narrative coming out of Yahoo about Thompson is that the company has finally found a CEO who “gets it.”
These people say that Thompson is engaged and learning about Yahoo’s business, that he is “pushing on thing he doesn’t understand or thinks we could do better.”
“So far,” says one source, “I’ve been having a good time having a CEO that gets products, data – [one who] listens and ask questions that let us know he gets it.”
Far from attacking Thompson’s personal style, this source says the new boss is “thoughtful,” “engaged,” and “downright fun.”
The people telling this narrative come from the product-building side of Yahoo’s business. They are the people who build and maintain things like Yahoo Mail, IntoNow, and Livestand.
This makes sense, because Thompson has no experience in media, and because he has made public statements suggesting that Yahoo should diversify its revenues so that it does not depend on the media business so much.
There are important outsiders on both sides of this brewing civil war.
Dan Loeb, the big Yahoo shareholder, stands with Yahoo’s media people. He has launched a proxy war to fire half the people on the Yahoo board and replace them with fancy media types like former MTV boss Michael Wolf and ex-NBC chief Jeff Zucker.
Yahoo’s advertising clients are with the media side of the business. An agency executive who spends a lot of his clients’ money on Yahoo inventory also subscribes to this view of Thompson and the company, telling us the new CEO “doesn’t even really grok what business Yahoo is in.”
Yahoo’s board members, meanwhile, favour the view that Yahoo ought to depend less on its media business.
So, who’s going to win this civil war?
Unless Loeb wins his proxy fight – and that’s a longshot – Thompson and his board have all the cards and they believe Yahoo should have diversified revenues. Executives who feel otherwise will probably find themselves leaving Big Purple within the year. New CEOs usually bring their own people in eventually anyway.
In the end, however, we suspect it’s actually Thompson and the board that will change their views. Advertising accounts for 95 per cent of the company’s revenue, and unless it stumbles upon a miraculous new line of business, it’s hard to stop that kind of momentum.
Yahoo is – and depends on being – one of the world’s premier digital media companies, whether the new CEO wants to admit it or not.
Yahoo declined to comment on this story.