Bloomberg: Time Inc. shows Yahoo interest
The rumor mill is running overtime this morning, as Bloomberg is reporting that Time Inc. may be interested in acquiring Yahoo, and a prospect that has disaster written all over it. None of the parties involved are talking publicly.
The speculation is based on a report that Time Inc. CEO Joe Ripp has heard a pitch from Citigroup bankers on a possible Yahoo deal. If I were CEO I would love to hear the pitch, too. So, if that is all the story is based on there is probably nothing really to it.
That being said, Yahoo is actively looking at a reverse spin off and the core assets of Yahoo will likely be sold fairly cheaply as most M&A pros see the real value in the company on the other side, its Alibaba stake.
What Time would be interested in is growing its digital audience. It just recently acquired Viant, owner of Myspace, for its data capabilities, and the company has had a string of acquisitions in 2015 tied to growing digital audience segments, especially among millennial women. Also, acquisitions will help grow revenue at a time when print advertising continues to decline.
“We came at Time Inc. with a very careful script that we laid out on the road show when we first with public of saying that we first had to go after our costs,” Ripp said on the recent earnings conference call. “We needed to get the place right sized in the organization so we had the resources to reinvest back in the business. But our primary goal all along was to return the company to revenue growth.”
Time has been involved in a few merger rumors since even before it spin off from Time Warner. Bloomberg mentions speculation concerning a merger with Meredith, for instance. But in this case we have two print magazine companies more interested in moving away from print than expanding their print portfolio. Meredith recently attempted to merge with Media General in order to move more strongly into broadcast (that didn’t work out as Media General eventually went with a counter bid from Nexstar Broadcasting Group, a company without print assets), and Time has been more interested in acquiring online and video assets than picking up more print magazine titles.
At Yahoo, the end is nigh. The board has said it will search for “alternatives” which, of course, means it will sell off the assets not tied to the Alibaba stake.
The NYT’s Steven Davidoff Solomon is not a fan of Yahoo’s board or its CEO, wondering why the company didn’t do this long ago.
“Yahoo is likely to sell for less than all of the money Ms. Mayer spent,” Solomon writes. “If she had sought to liquidate Yahoo as soon as she took over and distributed the proceeds, Yahoo shareholders would have fared much better than they will now.”
Yahoo’s eventual buyer may end up being a private equity company hoping their are enough assets to sell off and enough employees to layoff to make it worth their while. Among the others mentioned is Verizon, which recently bought AOL. My guess is Time Inc.’s Ripp, if he really did talk to the banks about Yahoo, was merely curious to see what the black book looked like. It must be quite a read.