Daily Mail joins Verizon and others in race for Yahoo

Verizon, which acquired AOL for $4.4 billion in May last year, is considered ‘a front-runner for Yahoo’ , according to the report

Photo: Bloomberg
Photo: Bloomberg

New Delhi: Yahoo is up for grabs, and there’s plenty of interest in the third-largest digital media company in the US, behind Google and Facebook. On 10 April, the Wall Street Journal reported that one of the potential suitors for Yahoo’s core business includes the Daily Mail & General Trust Plc, the parent company of UK-based newspaper Daily Mail.

The report said that the company was in “talks with several private-equity firms” to launch a bid for Yahoo, whose “core business” includes search, mail and news sites. Daily Mail, the report added, was just one of the 40 contenders in the fray. The bid, according to WSJ, is at an early stage with The Mail yet to meet with Yahoo executives.

Verizon Inc., which acquired AOL for $4.4 billion in May last year, is considered “a front-runner for Yahoo”, according to the report. Besides Daily Mail and Verizon, other suitors include American internet media company IAC/InterActive Corp. (which owns sites like About, Ask and OkCupid, among others), broadcast television network CBS Inc. and Time Inc. (publishers of Time Magazine and Fortune). While there were reports of Yahoo’s one-time rival—Google—exploring a possible acquisition, the WSJ report said that after reviewing “the materials”, Google is unlikely to move forward with a bid.

Then there are private equity firms, including TPG Capital, Bain Capital and KKR. Microsoft is also in the fray and has initiated talks with private equity firms. The company, according to reports, will back potential buyers and not bid directly for Yahoo as it famously did in 2008, when then CEO Steve Ballmer tried to buy Yahoo for nearly $45 billion.

Yahoo’s market value currently stands at $34.15 billion, largely thanks to its stake in Alibaba and Yahoo Japan. Minus these holdings, its “core business” is valued between $4.3 billion and $6 billion.

But why are these companies interested in Yahoo?

For most suitors, there’s a lot to gain from a potential Yahoo acquisition. First, the company boasts of a user base of 1 billion, when it comes to its sites like mail, finance, sports and video. Second, Yahoo, as we know it today, generates a lot of content and sells it to advertisers, a core part of its advertising strategy. However, this is in complete contrast to how digital advertising has evolved, where advertisers prefer using data and technology to reach/target their audiences. It is seen as a weak player in every major internet market, including search, social media, advertising and video, where the likes of Google and Facebook dominate.

For Verizon, having Yahoo as part of its growing media portfolio is a natural progression post its acquisition of AOL last year. The Verge reports, “The goal is to combine the scale of AOL and Yahoo on the web with the customer and location data of Verizon to create an advertising operation that could rival Facebook or Google.” As Vox explained, “With Yahoo and AOL under one roof, Verizon would be able to integrate their ad sales teams and offer advertisers packages that include media brands from both companies.” If it goes through, Verizon could also add a new source of advertising revenue from Yahoo’s video-ad unit Brightroll.

In the event of Yahoo’s takeover by Daily Mail, it would “markedly increase the Daily Mail’s presence in the US, where it launched a version of its website in 2012. Since then, the publisher’s aggressive mix of news aggregation and celebrity and scandal coverage has made it a top-ranking news site with 66.7 million unique US visitors in February, according to comScore Inc,” the WSJ report said.

Yahoo had initially set a deadline for 11 April for bids from potential buyers. However, that date has been extended by a week to 18 April.

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