Yahoo! (YHOO) is hoping to get more out of the World Cup than the U.S. national team did.
The most-visited Web site tells
it is in discussions with FIFA, the international body that runs the World Cup, to continue as the tournament's official Internet partner.
The company's current contract with FIFA expires at the end of the current World Cup, says Dan Berger, a spokesman for Sunnyvale, Calif.-based Yahoo!. The company and FIFA jointly run the World Cup Web
site and split the revenue. Berger declined to provide specific financial information on the deal, which started in 2001.
"We are currently in negotiations with FIFA and one of the topics is renewal," Berger says. Unlike fans of the U.S. team, which bowed out of the tournament Thursday with a 2-1 loss to Ghana, Yahoo! is "incredibly pleased with the results so far," Berger adds.
During the second week of the World Cup, an average of 169 million pages were viewed by 4.2 million visitors, and 523,000 videos were streamed each day at the official site run by Yahoo! and FIFA, according to comScore Networks.
The World Cup's popularity highlights the Web's growing use as a mass medium. Video content also is surging in popularity among advertisers because it keeps users on a site longer than they would be otherwise. This also may give Yahoo!, whose shares have tumbled more than 20% this year, a boost to its bottom line.
"It's fair to assume that they will probably get some favorable returns based on their sponsorship of the World Cup and the operation of the official Web site," says Scott Kessler, an equity analyst with Standard & Poor's, who rates Yahoo! shares as a buy.
Yahoo! attracts about 130 million unique visitors, the most on the Internet. About 25% of the traffic going to the World Cup site, which features video highlights and news, is coming from the main Yahoo! portal, according to the market research firm Hitwise Inc.
Since Yahoo! first got the deal for the World Cup, Internet video has vastly improved thanks to the growing use of high-speed Internet connections. Advertisers too are showing a growing interest in Web video because it keeps users on Web sites longer than they otherwise would stay.
The World Cup has attracted more interest than other Web events, including last year's showing on Yahoo! of Howard Stern's last day on terrestrial radio and AOL's broadcast of the Live 8 concerts. Yahoo! has added new features to the site for the current tournament, to allow for fans to blog about matches and to share photos, to take advantage of the growing popularity of so-called user generated content.
"The overseas markets are an emerging business line for Yahoo!," says Timothy Griskey, chief investment officer of Solaris Capital Management, which owns shares of Yahoo! among its more than $1 billion in assets under management. "Establishing a presence in the premier sporting event of the world has got to benefit them."
So many people are turning to the Web for World Cup news, that may be cutting back on other types of Web activity such as searches, analysts say.
"We believe the World Cup could have somewhat of a negative impact on overall Internet usage and search query volume, particularly throughout Europe, writes Lehman Bros. analyst Douglas Anmuth in a report to clients yesterday. "The World Cup is scheduled to run from June 9 to July 9 and therefore will likely only affect the last few weeks of the second quarter and the first week of the third quarter."
, the largest search engine, may be "disproportionally" affected by the World Cup because of its strong market position in Europe, he says.
Whatever hit Google may take from the World Cup is going to be made up elsewhere. Anmuth also reiterated his outperform rating on the shares of the Mountain View, Calif.-based company, pointing out that the company continues to gain market share against its competitors, including Yahoo!.