Five Reasons Why The Katie Couric - Yahoo Deal Makes Sense

After a couple of weeks on rumors, Yahoo made it official on Monday. Katie Couric will be exiting ABC News to join Yahoo as "global anchor" for the web portal.

Predictably, much of the attention about the announcement from the TV and media press focused on the perception that Couric is "trading down" by leaving broadcast TV. There were a number of attempts to parse the possible audience sizes of Yahoo and ABC News and a fair amount of confusion about what either side might get from the deal.

Even after reading Alex Weprin's Capitol New York interview with Couric, it's not clear precisely what she'll be doing for Yahoo:

"We are trying to be very open-minded," Couric said. "What I really am excited about in working with the team at Yahoo is that there are no rules right now, we are going to try things, we are going to see how they go, we are going to see what people are interested in, we can do everything from a town hall meeting to in-depth interviews to a breaking news story."

So why did Couric sign with Yahoo? Is the deal really a good idea? Obviously, it's too early to know for sure, but based on what we know now, here are five reasons why the deal could make a lot of sense for both sides:

1) Despite The Revenue Upside, No One Has Figured Out How To Build A Web-Centric News Video Brand. Especially On A Global Scale

Yes, revenue for web video isn't where it needs to be longterm, but there is still plenty of money to be made streaming news video. But most of the money being made with online news video is driven by traditional news brands. For all of the success of web efforts by sites ranging from Politico to The Huffington Post, some studies suggest as much as 80 percent of web views of news content take place on a traditional big-media news site (or at the very least, their videos posted on a partner site). That's why you see web companies such as Yahoo and YouTube working so hard to build news channels. There's lots of money to be made, but no one's figured out the magic formula.

2) News On The Web Is The Future, And This Is The Time To Carve Out Your Spot

A 2012 Pew Research report stated that 39% of respondents got news online or from a mobile device "yesterday," up from 34% in 2010, when the survey was last conducted. Mobile use is growing faster than any other segment of the online market and news video is a perfect vehicle for mobile consumption.

But unlike traditional TV news, there are many online news brands and viewer's habits tend to be driven by convenience. social media and habit. So when it comes to online news, you're looking at a growing ad pie, that is currently in flux and not dominated by any one site or company. That's unlikely to remain the case as the online news video market matures. So if you're going to stake your claim to the gold, this is the time to do it.


3) Both Yahoo And Katie Couric Are Known Quantities To Most People

I won't go into all the reasons why Yahoo and Couric have each struggled in recent years. But they both have name recognition and in the crowded online marketplace, that's a factor that shouldn't be underestimated. Why do some people bother to keep watching the national evening news on the broadcast networks? Because it's a known quantity. Familiarity may breed contempt, but it also makes it easier to market your content.

4) Unlike ABC News, Yahoo Is Willing To Spend Some Money

Couric's role at ABC News was always an odd fit. She didn't have a lot of reporting resources available to her and she was limited in the scope of what she could cover. But at Yahoo she's the big news dog, and under CEO Marissa Mayer, Yahoo has shown that it's willing to spend money, as illustrated in the earlier deal to make the web portal the official online home of "Saturday Night Live." Mayer wants this deal to work and while there aren't any guarantees, Yahoo has both the deep pockets and existing content distribution deals to make the partnership work financially.

5) Couric Brings A New Level Of Credibility To Its Video Products

In April, Yahoo made a presentation to advertisers as part of the upfront-style NewFront event. They announced some new original shows, a deal to create a WWE-branded video portal and some other smaller deals. But Couric and her fledgling news operation bring a vital missing piece to Yahoo's video plans. It's easy to imagine what her presence will add to next April's presentation.

Sure, there are a lot of things that could go wrong with this deal. Yahoo could decide to change editorial focus (yet again). Couric could decide that she doesn't want to devote the time and effort required to make this deal a success. But based on what details are available, this deal makes sense for both sides. What's left is seeing if they're able to take advantage of the positives.