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Twitter Inc (TWTR) Trails Yahoo Spirit In Sports Spending

Twitter Inc (TWTR)
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Twitter Inc (NYSE: TWTR) is still something of a mystery to Wall Street despite some signs that the firm is cleaning up its act. Much like Yahoo, Inc. however, every time the firm makes a move it seems to raise more questions than it answers. Twitter boss Jack Dorsey has set his sights on sports streaming, and no-one really knows what to do with that information.

On Sunday the Financial Times reported that Twitter would seek the rights to stream the US PGA Championship in the United Kingdom. The bid emerged after it was revealed TV heavyweight Sky had not secured exclusive rights to the major event. Jack Dorsey’s firm is now looking to compete with UK satellite and cable television. For those with shares in the firm, that doesn’t make its future any clearer.

Twitter tries to be the sporting social network

Last year Twitter won the rights to stream 31 small PGA tournaments online. The US PGA Championship is one of golf’s “major” outings, however. That means it’s going to be a lot more expensive for the San Francisco micro-blogging firm. The Financial Times estimates that the TV and digital deals together will cost about $10 million.

Twitter Inc (TWTR)

Twitter isn’t the only firm trying to use its online platform to become a sports streaming giant. Though much more focused on the United States, both Facebook Inc (NASDAQ: FB) and Amazon.com, Inc. (NASDAQ: AMZN) have tried their hand at streaming. Their competition in the market means that the price of securing digital content likely goes up for Twitter.

The firm is still in negotiations around the deal, and there seems to be a major chance that it won’t be able to close the deal. It is competing with at least one other firm: a large, free-to-air British TV firm according to the Financial Times. That likely points to the BBC, an organization able to take a lot more risks, and with a lot more experience, than Twitter.

Is Twitter stock like Yahoo?

During the Marissa Mayer years at Yahoo the firm’s actions were an almost constant mystery. Between the buyout of Tumblr and the big “focus” on video, including original content and sports, some kind of grand strategy was always assumed. As the years dragged on and Yahoo never became valuable Wall Street lost faith in the firm’s plans.

Those holding onto Twitter Inc (NYSE: TWTR)  stock are in a dilemma at the moment. As with Yahoo, the firm appears to know what it’s doing. At the same time, the strategy it’s following really isn’t clear. The bid to become a sports hub puts that confusion in stark detail.

Yahoo eventually ended its ignominious run by becoming part of Verizon. That’s a fate that many traders hope can come to befall Twitter. Though the firm has a huge engaged user base, it just hasn’t been able to live up to its financial potential.

The golfing news does, however, come at a decent time for the firm. Twitter stock is up by more than 17 percent over the last month on better advertiser response to the firm’s products. Right now it seems as if most traders are hoping the company can break out of its Yahoo-like holding pattern.

Can Twitter be a success in sports? There’s no reason why not, and surely a lot of evolution is to come as sports entertainment is bent to fit a digital world. Yahoo, however, made sports a big part of its play for monetization. That should give pause to anybody with shares in Twitter.

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Mary MacGowan

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