Yahoo! signs exclusive search deal with Viacom

Yahoo Inc., on Tuesday has entered into a multi-year partnership with media conglomerate Viacom Inc. to provide exclusive sponsored search and contextual ads to all high-profile Web sites owned by Viacom.

Under the deal, Yahoo will initially cover Viacom’s 33 broadband sites, including MTV.com, VH1.com, Nickelodeon.com, comedycentral.com and BET.com, with potential expansion to more than 140 additional Viacom Web sites worldwide, the companies said in a joint statement.

The multiyear, exclusive advertising partnership between New York-based Viacom and Sunnyvale-based Yahoo likely shuts online-search giant Google Inc. out of Viacom's most-important online entertainment sites.

The deal can also be seen as Yahoo’s latest effort to stay ahead of its arch-rival Google in online-search competition.

Before signing deal with Yahoo, Viacom had been negotiating the rights to license video content to Google, but later sued the numero uno search provider over copyright infringement, discarding the chances of any search ad deal between them.

On their latest deal, Yahoo Chief Executive Terry Semel, in a statement Tuesday, said the partnership with media giant "marks the beginning of a powerful and engaging partnership between our two companies."

While highlighting Yahoo's commitment to protect copyrighted material on its sites, Viacom Chief Executive Dauman said, "There's a lot of compatibility between our company and Yahoo. It would not surprise me that, over time, our relationship with Yahoo will grow."

Both the companies did not disclose financial terms of the high-profile deal.

The lucrative keyboard ads on 33 Web sites will be powered by Yahoo's newly launched search marketing system code-named "Panama".

Launched in early February, the new search ad technology, Panama, which is designed to make search query results more relevant and make the ads placed next to those results more valuable to advertisers, from the deal would get a great boost to prove its ability to compete with Web search leader Google.

Yahoo is engaged in pitched battle with Mountain View-based search leader Google and other companies over the lucrative keyword ads, which are generally text ads targeted to a user's search terms or the contents of a Web site.

"Viacom is a global leader in entertainment that shares Yahoo's commitment to connecting users to the content, products and services for which they are looking while respecting copyrights and other intellectual property rights at the same time," CEO Semel said.

In March, Viacom sued Google for $1 billion, alleging Google's San Bruno-based video-sharing site YouTube knowingly infringed Viacom copyrights "on a huge scale." Besides claiming "massive intentional copyright infringement" of its properties Viacom demanded for an injunction preventing Google and YouTube from further copyright infringement.

Shares of Viacom fell 36 cents or 0.7% to close at $40.64 on the New York Stock Exchange, while shares of Yahoo were trading slightly higher to $31.85 on the NASDAQ Stock Market.