DivX sues Yahoo over canceled ad deal

Yahoo is in yet another sticky situation as a result of a canceled advertising deal.

Digital media company DivX on Monday filed a lawsuit against Yahoo because the search company backed out of a two-year advertising agreement the companies reached in September of last year. DivX said the canceled deal will hurt its revenues.

Under the terms of the agreement, consumers who downloaded DivX video software tools were offered a co-branded version of the Yahoo toolbar as well as a version of Internet Explorer 7 with other Yahoo services. Before the Yahoo agreement was reached, DivX had a search tools deal with Google.

DivX filed suit in California Superior Court in Santa Clara County, seeking damages and specific performance under the agreement from Yahoo. In light of Yahoo's decision to back off the deal, the company adjusted its 2008 revenue estimates from a range of $95 million to $97 million to range of $90 million to $92 million.

Yahoo said in a statement the two companies have been working to restructure the toolbar distribution agreement but could not reach a resolution.

"Yahoo is disappointed with DivX's decision to pursue legal action rather than renegotiate this agreement," the statement said. "We intend to vigorously defend ourselves in court, but will reserve further comment until we've had an opportunity to review the suit."

The lawsuit comes just two weeks after Google backed out of an advertising deal with Yahoo, which would have brought in substantial revenue for Yahoo.

[Thomas, David]

Work it out first DivX. Jumping to litigation too soon will most likely end up in having a judge to tell you to go back to the tables first.

[tremorfireheart]

it depends on what they signed as part of the deal in the first place. if yahoo signed then divx has every right to enforce to the terms of the contract and seek reprecussions if they fail to meet their end of the bargain. Divx has no responsiblity to renegotiate a signed deal. A contractor down in florida signed an agreement to build a play ground for a fixed sum. Just before he completed a hurricane came and wiped everything out. The judges ruled that even though the situation was now unfavorable he still had to build the park without any additionals funds from the person who hired him and still to the same specs as were agreed upon in the contract. yahoo was hired to do a job. despite the hurricane of the microsoft and google deals they should still complete the work contracted.

[HlLLARY CLITON]

Yahoo is messed up

[tacit]

Not really a comment about this article per se, but more a comment about the abstract of the article, which reads "Just two weeks after Yahoo learned it would be losing out on a revenue-making ad deal with Google, it's own reneging on an ad deal is prompting DivX to sue the search company."

It's means "it is." I have seen this error cropping up on CNet all over the place lately. Yes, I know that bad grammar is epidemic on the Web, but c'mon. You people get PAID for this. You have EDITORS. Who also get paid,m presumably. And it appears that some of CNet's editorial staff doesn't know basic grammar.

Take some pride in your work, guys. If you're being paid to write, learn tow to write.

[Thomas, David]

Unlike us *lol*

[walsh84]

While I agree with you, it might be a good idea to give your own comments a second look before taking on the role of the grammar police.

[Vegaman_Dan]

"If you're being paid to write, learn tow to write. "

And if you're being paid to spell, learn how to spell? :)

[tm_anon]

Google has always been the search giant, doing its own thing and ONLY its own thing. Yahoo should do something completely different. For example, Yahoo is the default search engine on Flock, one of the two newest web browsers available. Why not negotiate a deal with Flock to enable more Yahoo services, bring this to DivX and set up a new model of business while they're at it? They could even use a tagline involving the spirit of cooperation. All three parties would gain and nobody loses. This might even bring a little sanity back into the world of online searches by helping to rekindle the fire for Yahoo.

[fdunn3]

Quote from Article:
Yahoo said in a statement the two companies have been working to restructure the toolbar distribution agreement but could not reach a resolution.

Yeah, just like they couldn't "reach a resolution" with Microsoft.

Yahoo is going down FAST!

[Sausagebiscuit]

I hate browser toolbars being jammed into software. At least most of the time now you can opt out during installation. I am glad to see this fail. DivX sucks anymore anyways. (More so the company, not the codec.)