The Twitter Bidding War Starts Now

The stock is up around 20% after sources announced that the company is moving closer to being sold. The company is expected to receive bids from many technology and media companies such as Google and Salesforce.


"Twitter's board of directors is said to be largely desirous of a deal, according to people close to the situation, but no sale is imminent. There's no assurance a deal will materialize, but one source close to the conversations said that they are picking up momentum and could result in a deal before year-end.

Why Twitter?


"1 personal learning network
2 the best realtime, context rich news
3 democratize intelligence
4 great place to promote others - Vala Afshar Salesforce, Chief Data Evangelist

I think there's a great dynamic for twitter in terms of appealing to media companies as well as tech companies. Twitter is a company that could be much better run fundamentally in terms of growth. Investors may have to pay a premium but what are your thoughts on possible bid numbers and valuation?

CNBC

 
Best Response

Thanks for bringing this for discussion,

I am one of the people who definitely agree that Twitter can be better run from every point of view,

Twitter is the only social network that people use to read feed properly and discover news and other information,the management has failed into developing the platform and introducing new convenient ways to explore the news feed, their most remarkable achievement is introducing the hashtags, I know lately they developed some sort of way to explore minute to minute updates on a specific topic but it is hardly understood/convenient.

There are many ways to solve the tweet length issue while conserving the traditional twitter feel and forcing people to stop posting external links and exploring content on the platform itself; there is nothing more annoying than seeing people post: 1/5) ABC, 2/5) DEF 3/5) GHI etc.. this will also increase Marketing revenue while increasing the time people spend on the application. I also can't think of how their developers haven't thought of these things which makes me feel sorry for the way Twitter is run.

With Facebook is focused on attacking Youtube's margins, the Facebook feed is 75% video and 25% content from friends, which has given Twitter a lot of space on attacking other post styles and yet they are failing to acquire the Market share that Facebook isn't focused on at the moment.

I hope they get acquired by the right people.

 

I think maybe news outlets with the blue check on them could be provided with more character lengths in tweets to be able to provide more content if needed. In addition, I think that there needs to be an easier way to discover real time news without necessarily having to follow 500+ people. That gets annoying.

 

The most common sense buyer would be one of the VCs that own a major Hollywood talent agency (Silver Lake, TPG, ValueAct, etc).

The synergies between actual physical talent/movie stars and Twitter makes much more sense than a "media" company.

 

Well think of it this way. Twitter is the human version of Netflix (purely conceptually speaking).

Netflix platform holds tangible content. Twitter platform holds intangible content.

When I say tangible/intangible, I am not talking about the GAAP/accounting definition.

Tangible meaning that it took resources to create it and can be monetized through forms of licensing and are legally bounded by rights.

Intangible meaning it took zero resource and it cannot be monetized through any form of licensing and are hold no legal rights.

With that being said lets take a look at Disney that is looking to acquire Twitter.

A company like Disney produces, owns, and manufacturers a product called "Tangible Content". This content is an accumulation of creative forces (director, writer, actors) and resources (crew, financing, P&A, marketing, etc) and can be heavily monetized.

A company like WME/CAA produces, owns, and manufacturers a product called "Intangible Content" aka Talent. These are products that cost almost nothing to obtain (i.e. more actors than roles), they can only be monetized through non-licensing activities (nobody owns Kanye's ability to throw a pop-up concert in NYC or Tom Cruise to accept a role) and ultimately are legally fluid (meaning they can and are encouraged work in any capacity: music, films, TV, writing, etc). An agency's main source of income realize solely on their ability for their clients to work. Twitter serves as a way for their clients to make money outside traditional streams (Films/TV shows, getting your script bought by a studio, etc.) Thus Twitter is viewed as a vertical entity not a horizontal one.

An agency buying Twitter is like Coca-Cola buying Coca-Cola Enterprises where as Disney buying Twitter is liken to Boeing buying American Airlines.

How could Disney or any tangible content producer benefit from having a tool like Twitter in their company?

Does Disney think they will be able to reach more people cheaply? Twitter is free.

Does Disney think they can get better end-consumer data? They already pay Twitter for the info and surely the acquisition cost of the entire company does not outweigh the couple bucks they spend yearly for said data.

Does Disney think they can grow their "millennial" consumer base? Pretty much why we've been seeing dumb legacy companies pay super premiums for "Unicorn" startups in the first place. Would be no different in this case.

Will it fill the gap EPSN's decline is leaving? Again, Twitter is free.

Let's look at WME/CAA

Does WME/CAA think they will be able to reach more people cheaply? They pray every night they can. Because one of main drivers of their client's base income is contingent on their social media presence. Own the social media platform, gain more control of the income driver.

Does WME/CAA think they can get better end-consumer data? Yes, this way their clients will have better info to curate their actions/tweets/etc to increase engagement of their users, thus increasing their social media presence, thus increase their income driver. It is important to note that agencies represent major corporations as well so this data to them is critical.

Does WME/CAA think they can grow their "millennial" consumer base? They already own the products (Kim Kardashian, Jennners, etc) that own millennials.

We've already seen - inconspicuously - SnapChat essentially pay Kim Kardashian to join the platform, so there are obvious synergies that the end-user do not see and that is kind of the point of these things anyways - it's to make users subconsciously want stuff so advertisers will pay money to advertise.

Disney has no problem selling their product to Netflix because that is wear it belongs - Netflix pays Disney and Disney recoups the money that they SPENT. The same logic applies to WME/CAA/ICM and Twitter except the agencies didn't pay anything for their product thus Twitter doesn't have to charge their users in return.

This is just my 2 cents, but if Disney REALLY wanted Twitter, there is no VC/PE firm in the world that could compete against them succeeding in that.

 

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