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Yahoo's struggles put a spotlight on its pricey deal with Katie Couric

 Yahoo's struggles put a spotlight on its pricey deal with Katie Couric
Hiring Katie Couric was part of a larger push by Yahoo CEO Marissa Mayer to expand into original content. Above, Couric, left, on stage with Mayer at the International CES in 2014. (Robyn Beck / AFP/Getty Images)

When network-news star Katie Couric said in late 2013 she'd leave television to become Yahoo's first "global news anchor," it was heralded as a groundbreaking move that would help the search giant and the broader Web go toe-to-toe with the behemoth of traditional TV.

But as a struggling Yahoo eyes a sale of its core search and media businesses, Couric's $10 million-a-year deal to roll out video packages has been wrenched into an uncomfortable spotlight.

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Couric's early promise of "major interviews" with newsmakers has garnered some notable names but meager traffic and little buzz. And estimates suggest the money Yahoo has pocketed through selling ads on her videos may account for only a fraction of Couric's pay.

"In today's world, you should be seeing links on your Facebook homepage to Katie Couric's new story on X, Y or Z, and you're not seeing that," said Ron Josey, a senior Internet analyst at JMP Securities. "Couric as a content provider is fine.... But how [Yahoo] monetizes it is something they need to evolve. They're having a hard time figuring out what advertisers are looking for."

Couric's Internet venture has highlighted the risky business for tech companies investing in original content designed for the Web, especially at a time when making money online has proven elusive, even for productions far cheaper than Couric's glitzy debut.

A Yahoo spokesperson declined to share data on how Couric's videos have performed among viewers or advertisers, saying only that Couric's videos had by the end of September generated nearly twice as many views as for all of 2014. The spokesperson added that Couric's videos were watched on average for more time than other views on Yahoo News.

A person close to Couric said her videos had attracted more than 150 million streams so far this year, and that viewers ages 18 to 34 had watched them for an average of more than three minutes a piece, compared with about two minutes for the typical Yahoo News video. Not authorized to speak publicly, the person spoke on condition of anonymity.

Couric's video coverage of the pope's visit to the U.S. and the second Republican debate, the person said, garnered more than 1 million views. Half a million viewers tuned in live to her coverage last week of the mass shooting in San Bernardino.

Yahoo won't share detailed measurements of Couric's financial progress, but back-of-the-envelope math suggests her operation is struggling to turn a profit. If all of this year's streams were tied to premium online-video ads — at a market rate, the Wall Street Journal estimated, of $15 to $25 for every thousand views — the revenue would account for about $3 million, far less than Couric's yearly salary.

Yahoo and Couric's office disputed the math, saying it doesn't account for the actual rate Yahoo can sell to advertisers. That money also does not include revenue from corporate partnerships for Couric's online video series, including Nissan's sponsorship of "World 3.0," her series of interviews with tech innovators, and Merrill Lynch's sponsorship of "Now I Get It," in which she explains news topics like visa waivers and tryptophan.

Couric's interview last year with Stephen Collins, the "7th Heaven" actor who admitted to sexually abusing underage girls, remains her best-performing segment to date, with 5 million views, Yahoo said.

"Katie is a world-class journalist and charismatic talent who is important to Yahoo and loved by our users," Martha Nelson, Yahoo's global editor in chief, said in a statement. "Everyone here appreciates the breadth of her coverage and her rare ability to bring difficult and challenging topics to a wide audience. We're excited to see more from her in 2016."

Couric, whose 25-year TV career included co-hosting the "Today" show and anchoring the "CBS Evening News," was recruited to help persuade advertisers that the Silicon Valley giant was a legitimate player in big media. That Couric was a household name in video, which commands some of the highest prices in Web advertising, was icing on the cake.

Couric's "talent acquisition" was one of the splashiest deals Yahoo Chief Executive Marissa Mayer has spearheaded since 2012 in hopes of turning around the lumbering Web giant. It was also a pricey one: Couric's initial $6 million-a-year deal reportedly soared to $10 million this summer when she renewed her contract.

Her hire was part of a larger push by Mayer to expand into original content, including hiring former New York Times consumer gadgets writer David Pogue to take over as editor of Yahoo Tech. But Yahoo's original-content push has already led to some major losses, including when the company this year wrote down a $42-million charge on its investments into original videos like a reboot of the TV comedy series "Community."

Investors say they have been largely underwhelmed by the more than $2 billion in acquisitions Yahoo has paid for under Mayer's tenure. Analysts and activist investors have pushed the Yahoo board to fire Mayer or sell off the company's core business after Yahoo's stock has plunged more than 30% this year.

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Couric's videos are given prime real estate near the top of Yahoo's homepage, the fifth most-clicked website in the world. But her links, tucked in an "Only on Yahoo" box between sports and investigative stories, are easily lost in the shuffle of Yahoo's busy main hub, which includes a jumble of links to external blogs, live concerts, trending searches, stock quotes and sports scores.

For an always-on Web medium, Couric's column has at times proved woefully untimely. By late afternoon Dec. 8, Couric's front-page link still pointed to a nine-minute interview of Sen. Rand Paul concerning President Obama's address Dec. 6, several news cycles earlier.

At an advertiser event in April, Mayer announced that Couric would also begin hosting a daily show, "Yahoo News Live." Couric's videos are cataloged on her Tumblr, the blogging service Yahoo bought for $1 billion in 2013.

Has Couric's hire paid off? Mayer told a New York crowd in May that Couric's deal was "a very profitable and good investment," and said it had helped elevate the company's reputation as a strong and risk-taking force for breaking news. "We've been so tremendously happy with the quality of the content," Mayer said. "The guts I think are as big as prime-time interviews, and in some cases bigger."

Couric has delivered chats with Mitt Romney, Ruth Bader Ginsburg, John Kerry and Sen. Bernie Sanders. She also landed one of the first interviews with Ellen Pao after she lost her gender-discrimination lawsuit.

Her most recent interviews include on-the-trail spots with Republican candidates Ben Carson and John Kasich, a sit-down with Planned Parenthood President Cecile Richards, and a chat with 26-year-old YouTube star PewDiePie.

Couric was not made available for an interview. But last summer, she told the New York Times that she believed "Yahoo can have some impact," though she conceded "it's going to take a while to build it."

"Impact can be measured in a number of ways," she said. "Oftentimes very small audiences allow you to do really important stories."

Drew Harwell writes for the Washington Post.

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