YouTube launches broad entertainment venture

YouTube is making a bold step into original programming in an entertainment venture with some 100 content creators, from Madonna to The Wall Street Journal.

The Google Inc.-owned video site said Friday that it's launching more than 100 new video channels. The partners include an array of Hollywood production companies, celebrities and new media groups that will produce mainly niche-oriented videos.

YouTube is shelling out $100 million to producers, according to people familiar with the matter, who spoke on condition of anonymity. The money is an advance on advertising money the videos will bring in, and Google will recoup its portion first before splitting the proceeds. Advances are as high as $5 million per channel, said another person familiar with the arrangement, also speaking on condition of anonymity.

Neither person was authorized to comment publicly on the matter.

Google declined to offer financial details of the deals, but said the majority of revenue will go to partners.

Participants include Madonna, former NBA star Shaquille O'Neal, comedian Amy Poehler, actor Ashton Kutcher, "Office" star Rainn Wilson, spiritual doctor Deepak Chopra and "Modern Family" actress Sofia Vergara. Most are creating channels through their production companies. Madonna is a partner with the dance channel DanceOn, while O'Neal plans the Comedy Shaq Network.

Lionsgate is presenting a fitness channel, and other channels will be launched by news satire the Onion, professional wrestling's WWE, online magazine Slate and news service Thomson.

The channels will roll out beginning this month, though most will premiere next year. YouTube says the channels will add 25 hours of new original content daily, with dozens of Web series debuting at scheduled times.

Ultimately, YouTube is aiming to create a new digital video platform that will rival television programming.

In a blog posting Friday night, YouTube said the channels are being developed "specifically for the digital age." The video site compared the expanded video offerings to the advent of cable television.

YouTube has tried to build a more advertiser-friendly product of professional-quality video, as opposed to simply user-created videos. Advertisers generally prefer to have their ads matched with known quantities. YouTube has also previously tried to urge viewers to stay longer with TV-like services like the YouTube Leanback, which continuously plays a personalized selection of videos. Google is also looking to add professionally produced content to its huge roster of user-generated videos, to give users of its Google TV platform something to watch.

Major Hollywood networks such as News Corp.'s Fox and The Walt Disney Co.'s ABC have blocked their content from being shown on Google TV because the sides have been unable to come to a licensing deal that the networks believes pays them fairly. Networks also don't want to jeopardize their lucrative relationship with pay TV distributors like Comcast Corp. and DirecTV.

Google is a platform that has been adopted by set-top box maker Logitech, which makes a device called a Logitech Revue that sells for $100.

Google buys Zagat to vie with OpenTable, Yelp

Google Inc has bought popular dining ratings authority Zagat, adding a valuable brand to its content offerings and bolstering its push into the rapidly growing local commerce market.

Local commerce offers services such as finding a discount from a nearby store, or a review of a neighborhood eatery, and the world's No. 1 search engine plans to compete in this market against Yelp and OpenTable.

The deal, for which Google did not provide financial information, gives it valuable content about restaurants, hotels and nightclubs that can be paired with its popular online maps and mobile search services.

Google needs to provide more than just directions to consumers seeking information about restaurants and other local businesses, said Marissa Mayer, Google's VP of Local, Maps and Location services, in an interview .

"It's also (about) getting them a sense of the place. A sense of what to expect," said Mayer. "Zagat reviews, in a few short lines and a few scores, gives you a great sense of a place very quickly when you're on the go."

The move is part of Google's push to adapt its online services for a world in which consumers increasingly access the Web on mobile phones such as Apple Inc's iPhone and rely on social networking services such as Facebook to get information from friends.

Last month, Google announced plans to acquire mobile phone manufacturer Motorola Mobility for $12.5 billion. The deal, if approved by regulators, will allow Google to produce its own line of smartphones based on its Android software.

"A reasonable person would say that Google may never beat apple in product design by itself. At least not for a sustainable period of time. But Google could better integrate content and have that become another reason to buy those devices," said Stifel Nicolaus analyst Jordan Rohan.

The 32-year-old Zagat, which polls consumers and compiles reviews about restaurants around the world, will become a cornerstone of Google's "local offering", Google said.

Google needs reviews and other content for its "Google Places" websites, in part to fend off criticism. It has been accused of using comments from review sites such as Yelp, essentially siphoning off their readers and, more importantly, their clicks. Google has toned down its borrowing of comments recently, Pitz said.

The Federal Trade Commission has been looking into the issue as part of a broad antitrust investigation, a source familiar with the probe has said.

The move raises the question of whether the search giant will start its own restaurant reservation service, building on existing ties with restaurants that advertise on it.

The shares of restaurant-booking service OpenTable, which also publishes reviews and ratings, closed down more than 8 percent at $57.50 on Thursday after hitting a low of 54.50 earlier in the day.

OpenTable is already reeling from financial results that have disappointed investors this year and the departure in May of CEO Jeffrey Jordan, who joined venture-capital firm Andreessen Horowitz. Jordan remains chairman.

Pitz said expanding into reservations would require extra steps such as building out reservation software and getting restaurants to install it, as well as building different relationships with the restaurants.

"It's apples and oranges," he said.

While much of Zagat's content is free and available to anyone, some content remains behind a paywall and it was unclear if Google would remove it.

Zagat gave Google a tongue-in-cheek rating on its home page on Thursday, awarding the Internet company a maximum 30-point rating for its "local, social, mobile and usefulness" categories. Industry analysts regard the local, social and mobile markets as some of the fastest-growing areas of the technology sector.

"We are thrilled to see our baby placed in such good hands and to start today as official 'Googlers,'" the founders said in a joint statement.

In late 2009 Google was in talks to acquire Yelp for at least $500 million, according to news reports at the time, but the deal fell apart.

Yahoo CEO Bartz fired over the phone, rocky run ends

Yahoo Inc Chairman Roy Bostock fired CEO Carol Bartz over the phone on Tuesday, ending a tumultuous tenure marked by stagnation and a rift with Chinese partner Alibaba.

Chief financial officer Tim Morse will step in as interim CEO, and the company will search for a permanent leader to spearhead a battle in online advertising and content with rivals Google Inc and Facebook.

Shares in the company jumped 6 percent. They are scarcely higher than where they were when Bartz first took the reins in January 2009 with hopes of reviving stalled growth and competing with up-and-coming rivals.

On Tuesday, her efforts were abruptly halted after Bostock called with the bad news.

The turn of events surprised few Wall Street observers who had tracked a rising torrent of criticism and watched revenue growth falter and sputter out.

Some analysts said Bartz's departure signalled the company had run out of options after failing to dominate the advertising and content markets and handing over its search operations to Microsoft Corp .

That partnership, under which Microsoft handles search for Yahoo's websites and keeps a portion of ad revenue, appears to favor the software giant at Yahoo's expense.

Yahoo said that a newly-formed executive leadership council would help Morse in managing day-to-day operations as well as supporting "a comprehensive strategic review" to position the company for future growth.

"It's hard to say what direction they are going to head. What is the next step for Yahoo? They went down the road of search, they went down the road of media, becoming a content company, they went down the road of advertising," said YCMNet Advisors CEO Michael Yoshikami.

"I'm not sure where they go right now. One wonders if this means that they might be ripe for a takeover."

Bostock voiced his public support in June for the CEO, a lightning rod for criticism from Wall Street, and known for her tough attitude and salty language.

Bartz's ouster capped a decade-long fall from grace for a company whose shares traded at more than $125 in January 2000 during the dotcom bubble -- but now languishes at about a 10th of that level.

Yahoo is still one of the most popular destinations on the Internet but faces increasing competition from social networking service Facebook and from Google.

Bartz arrived at Yahoo in January 2009 after a solid showing at software giant Autodesk with high hopes of turning around Yahoo, after co-founder Jerry Yang was widely thought to have botched a $47.5 billion proposed takeover by Microsoft, rebuffing that advance as too low. Yahoo is worth about $16 billion today, with much of that ascribed to its slice of Alibaba.

The Internet company reported a slight decline in net revenue in the second quarter, as efforts to restructure its sales force caused disruptions.

Research firm eMarketer has projected that Facebook would overtake Yahoo this year to collect the biggest slice of online display advertising dollars in the United States.

The management and board also came under fire after the company's handling of its relationship with China's Alibaba Group, in which Yahoo owns a stake of roughly 40 percent.

The rocky relationship between the companies came to a head in May when it was revealed that Alibaba had abruptly handed Alipay -- one of Alibaba's crown jewels -- to a company controlled by Alibaba founder Jack Ma, apparently without Yahoo's knowledge.

"They are going to need a vision of what they want to be in the future. And I don't think investors really understood what that clear vision was," Yoshikami said.