Yahoo! Hopes Fifth Time’s the Charm

Ross Levinsohn, the fifth CEO in four years, has a mixed record | He’s “an old News Corp. guy ... a loud, pound-the-table kind”

Ira Boudway and Peter Burrows

“I’ve kept my head down for most of my career. When it’s popped up occasionally, you get whacked.”


When Yahoo! was searching for a new chief executive officer in October after firing Carol Bartz, the company’s head of global media, Ross Levinsohn, went on stage at the Web 2.0 Summit in San Francisco. His interviewer asked if he was interested in the job. “I’ve kept my head down for most of my career,” he responded. “When it’s popped up occasionally, you get whacked.”

Levinsohn’s head just popped up again. On May 13, Yahoo named him interim CEO following the resignation of Scott Thompson, whose résumé, the company admits, included a computer science degree he never earned. Levinsohn becomes Yahoo’s fifth CEO in four years and, like all the others, he’ll find no easy answer to the question of Yahoo’s future. The company is bleeding market share in its core business — display ads — and growth has stagnated at marquee properties like Yahoo! News and Yahoo! Finance.

Levinsohn is auditioning to become permanent CEO, and the new board will have a mixed track record to judge him by. At News Corp., where he worked from 2000 to 2006, Levinsohn rose from running to overseeing Rupert Murdoch’s Web ambitions as head of Interactive Media. In that role he was instrumental in one of Murdoch’s most prominent new media forays: The 2005 purchase of MySpace for $580 million.

It’s easy to mock the acquisition now — News Corp. dumped MySpace for $35 million in June 2011 — but at the time MySpace was a hot property. According to ComScore, MySpace had more than 55 million visitors in August 2006 to Facebook’s 15 million. That month, Google agreed to pay $900 million to run MySpace’s search and place some of its ads. The partnership instantly earned back Murdoch’s investment but may have sowed the seeds of MySpace’s decline. The deal forced MySpace to clutter its site with low-end banner ads that eventually alienated people, according to co-founder Chris DeWolfe. “[It] basically doubled the ads on our site,” he told Bloomberg Businessweek last June. “MySpace went down the route of trying to monetize too much, and it turned off a lot of users,” says ThinkEquity analyst Ron Josey.

Though MySpace is a key line on Levinsohn’s résumé, the measure of his blame or credit is unclear. “I don’t know if all that falls on Ross’s plate,” Josey says of the site’s decline. In the 2009 book Stealing MySpace, journalist Julia Angwin portrays Levinsohn as a pawn in Murdoch’s games of corporate intrigue. Murdoch used Levinsohn as a way to ensure that he could “interfere as much as he liked,” she writes. And it was former News Corp. Chief Strategy Officer Jim Heckman, she recounts, who pulled off the Google deal during a corporate retreat in Pebble Beach, Calif.

After leaving News Corp. in 2006, Levinsohn teamed up with former AOL CEO Jon Miller to begin a venture capital career focused on digital media start-ups. They were unable to raise a round of outside money, say two people with knowledge of these efforts who asked not to be identified because the information is private. Instead, the duo merged with a Palo Alto-based firm which had already raised $1.5 billion. Over the next three years, Levinsohn led investments in eight digital media companies. Two have yet to make money for their investors. One was shuttered, and five were sold at a loss to the firm of around $15 million.

One of Levinsohn’s investments was FatTail, which makes advertising software. The company’s founder and former CEO, Stephen Pelletier, has mixed things to say about Levinsohn: “He was a really good big-picture guy. He was outstanding at creating sound bites — at condensing something down to a few words.” But he was not detail-oriented, Pelletier says. “He’s an old News Corp. guy. A loud, pound-the-table kind of personality. I just don’t know if that’s what Yahoo needs right now,” he says.

What may matter most for Yahoo is that Levinsohn knows online advertising. Yahoo’s largest source of revenue is display ads, where its market share fell from 18.4 percent to 10.8 percent between 2008 and 2011, according to EMarketer. On that front, “he’s going to be well served from seeing the rise and fall of MySpace,” says Lee Brenner, who ran political programming for the site from 2007 to 2009. Josey adds: “He knows how important advertising is to the business. That might sound sort of obvious, but it’s not easy to go to a marketer and talk reach and frequency ... if you don’t have that experience.” And at Yahoo, ad-world experience may be far more important than investment prowess.

The bottom line Yahoo’s new interim CEO has a poor record as an investor but knows the ad business well and learned from MySpace’s rise and fall.


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