Along With Spinoff Decision, Yahoo May Unveil Restructuring of Media Unit and Maybe More

According to sources close to the situation, Yahoo has been preparing to make big changes to its media unit, restructuring and consolidating it, including making cuts and shuttering some efforts.

Some expect that such changes could be announced inside Yahoo this week, part of a series of recommendations by McKinsey & Co., the consulting company that the Silicon Valley company has hired to rethink its overall business. But the timing is unclear amid all the other bigger issues percolating inside the company this week.

First and foremost among them is whether Yahoo will press ahead with its spinoff of its 15 percent stake in China’s Alibaba Group. The transaction was expected to happen in January, but issues around whether it will be tax-free or not have created some doubt about its efficacy.

Activist shareholder Starboard Value, which had once pressed for the deal, is now opposing it. Yahoo’s board has been mulling a pause of the spinoff, but the company has made no formal announcement about the outcome of those discussions. A decision to move forward or not is expected soon, but I still cannot determine what that is as yet (and I am trying!).

The spinoff is the most immediate concern, since much of what will happen next under the troubled leadership of CEO Marissa Mayer will cascade from it.

If Yahoo moves forward with the spinoff, it will be subject to an ugly proxy fight with activist shareholder Starboard Value. Starboard had once pushed for the spinoff, but now wants Yahoo to dispose of its Internet units — like media — instead, due to the potentially onerous tax issues. Starboard would offer its own slate of directors, which could change the balance of power at the company if successful.

If Yahoo does do the spinoff, Mayer still faces a business whose value is all in its investments — which include a stake in Yahoo Japan, too — and not in its core. Despite three years of frenetic efforts, she has yet to turn around the company’s fortunes.

Of late, Mayer has been focusing in on a project that is codenamed Index, which is a massive effort at building up mobile search. That focus could come at the expense of Yahoo’s adjacent media offerings, said sources.

For now, those parts of the media landscape that remain safe include its big juggernauts: News, sports, finance, style and celebrity content. But it has a lot of other verticals that could be combined with others or abandoned completely, such as movies, beauty and politics, as well as health, autos and crafts.

Yahoo’s media unit is now under the purview of veteran media exec Martha Nelson, after the departure of Kathy Savitt. Since she took over it lost two leaders: Ken Fuchs and Rob Barrett.

That may all be moot if Yahoo’s board decides that Mayer — who has been urging it to stick with her plan — cannot make it work and takes in bids from possible buyers of its Internet assets.

While there is nothing serious brewing, there would be obvious interest from a plethora of buyers, from private equity firms (less likely) to big media companies (more likely) to telco giants (most likely).

Today, for example, Verizon CFO Fran Shammo said in a refreshingly offhand manner at the UBS Global Media and Communications Conference today:

“It’s just like with AOL, I mean we look at everything across this spectrum. And if we see there is a strategic fit and it makes sense for our shareholders and we can return value, I mean we’ll look at it, but at this point it’s way too premature to talk about that one. … All I can say is we don’t know what Yahoo’s board will decide. It’s too early to know.”

Well said about a lot of things with Yahoo — although it is probably time for the board to be a little more urgent in its thinking and, most of all, actions.

This article originally appeared on Recode.net.