Saturday, September 27, 2014

Bloomberg Buying Yahoo?

Courtesy: Bloomberg
The rumor mill is churning at another big media merger which could possibly be going down soon. According to an anonymous Twitter account which posts rumors that New York City cab drivers hear from their passengers:
Bloomberg Media has secretly offered $33 Billion cash buyout of Yahoo
Bloomberg's offer would be just under Yahoo's current market cap (total value of shares) of $38 billion. Both companies have been hard at work trying to increase the amount of media content they own.

Yahoo recently started producing sitcoms which are set to debut in the fall, saved critically-acclaimed series "Community" from extinction, signed a deal with Live Nation to air one free concert a day and is beefing up their news department by signing Katie Couric among others.

Jon Heilmann and Mark Halperin, courtesy: Yahoo (ironic)
Ironically, Couric's first interview for her new web series on Yahoo was with Michael Bloomberg in which the duo discussed Bloomberg's transition away from New York mayor to private citizen.

That transition has been anything short of quiet. Mr. Bloomberg, in a spectacle captured by the New York Times, went from solely focusing on his foundation to taking over as the head of Bloomberg Media once again.

Along the way, his foundation helped organize a summit between Africa's head of states and President Obama while his media company signed political journalism superstars Mark Halperin and Jon Heilmann as the head honchos of their own political vertical and their own political version of ESPN's "Pardon the Interruption." The next big project for Bloomberg Media is a business vertical which will be aligned with BusinessWeek.

Katie Couric and Mike Bloomberg, courtesy: New York Post
As Alex Weprin points out in Capital New York, Bloomberg Media has many different outlets but it lacks mainstream luster. If this rumor turns out to have some validity, this could be Mr. Bloomberg trying cure all ills with an acquisition which is expensive but less of a hassle to deal with compared to the other mainstream companies with luster which are available for acquisition such as Time Warner, Viacom and CBS.

Bloomberg Television could easily add Katie Couric as it's lead anchor with Yahoo's other experienced journalists added to the fray as well (Matt Bai, Michael Isikoff, Bianna Golodryga, David Pogue). Bloomberg's web content (specifically it's successful online video division which sees 27.4 million global video streams as of 2013) would also have a larger platform to flourish in.

We could even see Bloomberg TV transform as a network. There might be more of a focus on general news and entertainment in order to compete better with CNN, MSNBC and Fox. Yahoo's resources and video rights, although tailored for the internet, could prove beneficial for the network if they make this sort of transition because Yahoo will put Bloomberg on the negotiating table with some of the biggest brands in entertainment (ABC, NBC, Live Nation, IHeartRadio, Sony, Broadway Video, NFL, BuzzFeed etc.), a luxury which they probably didn't have before.

Yahoo could benefit as well because they'll finally have an outlet of their own to branch out into television with. They won't need NBC Sports Network to produce fantasy sports shows with nor will they need "Good Morning America"'s TV-ready content to distribute on their website for female readers because they could produce all of that television content on their own if they wanted to (Although I suggest they keep their deal with "GMA" if this transpires because it never hurts being associated with the #1 morning show on TV).

Marissa Mayer, courtesy: Joy A. Martin
The most intriguing part about this potential deal is whether Bloomberg wants to acquire Yahoo because of Yahoo or because of the shares of Alibaba which Yahoo owns. Does Mr. Bloomberg have a grand scheme of his own ideas of how he wants to use Yahoo's new-found treasure chest?

Marissa Mayer may be at the precipice of the biggest business decision in her lifetime. The decision she makes could make or break Yahoo and her career. Would she really want to cede all of that control, power and potential success to Mr. Bloomberg even though she's under some of the most intense pressure of her life right now?

Courtesy: CNN/KCRA
On a sidenote, Ms. Mayer: don't buy AOL. It would be like having the choice between buying a Benz and a Maserati. AOL is the Benz. It will keep Yahoo smooth sailing, it'll help Yahoo increase it's video library and advertising business but it won't transform your company into what it once was. It's not a sexy acquisition.

Which company is the Maserati? That answer is above my pay grade but I know it's not AOL. It is most likely a video company of some type because video is the future for the internet. I just don't see any video companies which are worth acquiring. No one stands out as a YouTube alternative. DailyMotion and Vimeo are doing an excellent job competing with YouTube but they're not going match YouTube's gravitas anytime soon.

My idea: Yahoo should save that money to buy some NFL rights (Thursday night rights expire next year, 2 playoff games possibly being added) which would reside alongside the TV-style sitcoms and series which the company has already invested in. It could help turn those shows into franchises which you can sell to television networks across the world. Yahoo could even sublicense television simulcasts of their games (assuming the package of games they would acquire would be exclusive to Yahoo).

It's worked before for Fox and I don't see why it wouldn't work for Yahoo's video player as well. Production companies would be flocking to get their content next to the NFL. Yahoo already has an "in" with the league since they are a distributor of NFL Now programming, now it's time to take their relationship to another level.

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