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The company took a $42 million write-down in its video division during the third quarter, CFO Ken Goldman revealed on the company’s third-quarter earnings call. He later explained that Community, Sin City Saints and Other Space were to blame, noting that Yahoo “couldn’t see a way to make money over time.”
Yahoo had dabbled in original video in the past with short-form series like the Bachelor spoof Burning Love. But under CMO Kathy Savitt, the company pushed to compete with streamers like Netflix and Amazon by buying a small slate of original TV-length series anchored by Community. Savitt was key to bringing the Dan Harmon comedy to Yahoo after it was canceled by NBC last year, convincing Harmon and Sony that Yahoo was the right home for the show, which Hulu had also explored buying.
All three shows debuted in the spring of this year to little buzz. In August, Community star Joel McHale revealed that his show would not be returning for a second season on Yahoo because the actors’ contracts were up. “All the actors on the show, almost without exception — their stock has risen significantly, and it’s out of the pay rate that is affordable to make the show,” he said during an interview. “So you’re not going to be able to get Alison Brie or Gillian Jacobs at a normal television salary anymore. There is just not enough money to be able to pay for the show.”
Yahoo, however, remained publicly committed to the series, telling The Hollywood Reporter at the time that it was “continuing to discuss future opportunities for Community.” Savitt has since left Yahoo amid an executive exodus to take the top digital job at STX.
The company is keeping the door open for future projects. “We’re not saying we’re not going to do these at all in the future, but what we are saying is, in three cases at least, it didn’t work the way we had hoped it would work,” Goldman said on the call.
The write-down comes as part of a weak third quarter for Yahoo, in which it slightly missed on both revenue and net income.
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