SAN FRANCISCO — Yahoo pulled the plug on an online video hub that had once been envisioned as the beleaguered company's answer to Netflix and YouTube.
The end of the Yahoo Screen is part of a purge being directed by CEO Marissa Mayer with hopes of generating greater profit elsewhere.
Mayer oversaw an overhaul of Yahoo Screen 16 months ago that came in the form of a new mobile application, thousands of clips from NBC's "Saturday Night Live" and a wide variety of other popular TV shows.
But Yahoo Screen never attracted the vast audiences that flock to Netflix and YouTube.
Yahoo is now scattering its video across its digital magazines and other services, such as Yahoo Music.
"We're constantly reviewing and iterating on our products as we strive to create the best user experience," Yahoo said in a printed statement.
Mayer has pledged to jettison technology that fails to justify the amount of money that Yahoo has been investing in them.
Yahoo telegraphed that its video expansion was faltering in October when it disclosed a $42 million charge to account for original shows, such as "Community," that had flopped.
Mayer is expected to provide more details about her latest plans for reorganization in about three weeks when the Sunnyvale, California, company announces its fourth-quarter results.
Industry analysts are expecting the steepest decline in Yahoo's revenue, after subtracting ad commissions, since the company lured Mayer away from Google to become its CEO three-and-a-half years ago.
Shares of Yahoo have fallen by about 35 per cent since the end of 2014 as the difficulty of reviving company revenue growth has become evident, and that has increased the pressure on Mayer to take more drastic measures. There have even been calls for Yahoo to sell all of its online operations, but Mayer and the company's board have rebuffed those demands to far.
By building a compelling video hub, Mayer had hoped to lure advertising away from Google, whose operations include YouTube, and social networking leader Facebook, which also boasts millions of clips shared by its users.
Yahoo's stock gained 64 cents to $32.04 Tuesday afternoon.
ACTIVIST INVESTOR STARBOARD VALUE WANTS YAHOO TO MAKE CHANGES TO ITS MANAGEMENT, BOARD AND STRATEGY
NEW YORK — A big Yahoo investor is asking for a leadership change at the beleaguered company and pushing for the spinoff of its core Internet business.
"Despite over three years of effort and billions spent on acquisitions, the management team that was hired to turn around the Core Business has failed to produce acceptable results, in turn, causing massive declines in profitability and cash flow," Starboard Value LP wrote in a letter released Wednesday. "It appears that investors have lost all confidence in management and the Board."
If changes are not forthcoming in leadership, Starboard said, an election may be needed to replace some members of the board.
Starboard did not include any specific names in its letter. Mayer became CEO of Yahoo Inc. in 2012 and Webb became chairman in 2013.
Starboard did not immediately respond to an early request from The Associated Press for comment.
With shares down 35 per cent over the past year, Yahoo is facing mounting pressure from unhappy shareholders.
Last month New York hedge fund SpringOwl Asset Management and Los Angeles investment firm Canyon Capital Advisors were vocal about the steps they believe Yahoo should take. SpringOwl wants Yahoo to lay off 9,000 of its 10,700 workers and eliminate free food for employees to help save $2 billion annually. Canyon Capital recommended Yahoo sell its Internet business.
Starboard had also threatened an attempt to overthrow Yahoo's board if the company continued with plans to break off its $31 billion stake in China's Alibaba Group. Yahoo eventually scrapped that plan and instead announced the spinoff of its Internet operations.
Starboard said Wednesday that it thinks Yahoo can improve the performance of the core business and separate its assets.
"We are confident that both of these objectives are achievable, but will require a change in leadership and strategy," Starboard said in its letter.
Yahoo has been working on a cost-cutting reorganization plan, with details expected to be announced this month.
Its stock shed 59 cents to $31.61 in premarket trading.
