Viacom and Yahoo Sign Exclusive Search-Ad Deal

Yahoo has signed a multiyear deal to be Viacom's exclusive provider of sponsored search and contextual ads. The ads will be powered by Panama, Yahoo's new search-ad technology. The deal is considered a significant win for Yahoo, as it prevents rival Google from advertising on at least 33 of Viacom's popular online entertainment sites, including MTV.com, comedycentral.com and Nickelodeon.com. Terms of the deal, which could ultimately be expanded to include 140 other Viacom sites, were not disclosed. The agreement comes a month after Viacom sued Google's YouTube video-sharing site for copyright infringement. Google has ad deals with some of the most visited sites on the Internet, including Time Warner Inc.'s AOL.com, News Corp.'s MySpace.com and IAC/InteractiveCorp's Ask.com. Yahoo's Panama technology makes search results more relevant and the ads accompanying them more valuable. Viacom is expected to receive 70-80% of the revenue generated from the ads.

Sources: Press release, Wall Street Journal, Seattle PI, MarketWatch, News.com
Commentary: Yahoo Displays Viacom As Internet Battle Victory • Yahoo Panama: Passage to Stronger Earnings? • Viacom Hits Google with $1 Billion Lawsuit over YouTube Copyright Infringement
Stocks/ETFs to watch: Viacom, Inc. (VIA), Yahoo! Inc. (YHOO). Competitors: Google Inc. (GOOG), Time Warner Inc. (TWX), Walt Disney Co. (DIS). ETFs: First Trust Dow Jones Internet Index (FDN), Internet HOLDRs (HHH), First Trust IPOX-100 Index (FPX), Consumer Discretionary SPDR (XLY)
Conference call transcripts: Viacom Q4 2006, Yahoo! Q4 2006, Google Q4 2006

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