Yahoo! is just on a tear with the acquisition strategy. Not half a heartbeat after being rebuffed by an idiotic French minister in their bid to buy Dailymotion, Yahoo! has decided to make a serious play for Hulu. Yahoo! is reportedly bidding $600-800 million for the streaming TV juggernaut, in addition to eyeing several other properties in mobile and communications.
It looks like Marissa Mayer is trying to mold Yahoo! into Google. Google has a blogging platform (Blogger, which kinda started it all), now Yahoo! has tumblr. Google has/had Picasa, now Yahoo! has Flickr. Google has YouTube, now Yahoo! wants a major video streaming property, and with a bid like that they're probably going to walk away with Hulu.
Besides Yahoo, others interested in acquiring Hulu include: Separate bids from private equity firms KKR, Guggenheim Digital and Silver Lake Partners (in conjunction with Hollywood talent agency William Morris Endeavor); Time Warner Cable; Directv; and the Chernin Group.
There could still be others, of course, though a deadline for initial bids has passed. Interestingly, so far, neither Google nor Amazon have made official efforts, perhaps because the pair already have robust video platforms.
Yahoo! has to be fed up with being an also-ran in the acquisition game. You might remember that they were on the short list to acquire YouTube before Google swooped in and bought it out from under them. They were also in advanced negotiations to buy Facebook in 2006 when that deal fell apart, reportedly because they were only willing to pay $1.1 billion when Zucks wanted $1.6. Has to be a bitter pill for Mayer to swallow knowing she just coughed up $1.1 billion for Tumblr, which is nowhere near as sticky as Facebook was even in 2006.
So now they're going for broke. In their favor is the fact that Hulu has more or less been horribly mismanaged for years, so they've got that in common. Hulu was looking to sell for a couple billion just two years ago, and now they'll be lucky to get less than half that. The current majority owner is a bit of a whack job who needs to be put out to pasture.
I like Yahoo!'s aggressive acquisition strategy and I like Mayer's leadership so far. But I'm wondering if the stock is a buy here. I mean, all this spending really could go two ways. It might work out huge for the company, but if it doesn't it has to mean the death of Yahoo! once and for all, right?
Very interesting to see how this plays out. Agreed that this could really hurt if they don't know what to do.
PS - Never really liked using Hulu.
This just feels like AOL c.2000: fighting to stay relevant. They'll be around, but - seriously - who uses AOL these days?
Don't say that. I just put in a limit order to buy.
I'm not sure where this puts Yahoo to be honest. Even if they acquire Hulu and secure a decent length of rights to the programming like ABC that is already on there, they will still be jumping into the ever escalating price war to acquire content or create your own original content to draw subscribers to your service.
Yahoo has plenty of cash at the moment plus they still have a decently sized stake in Alibaba so I'm not necessarily worried about them sinking themselves with these acquisitions but how on earth are you going to create a coherent and streamlined user experience on Yahoo? Frankly, why would I leave Google, Amazon, Netflix etc to move to Hulu and Yahoo. I can't imagine people would be subscribing to multiple different services. I don't really view this as a buy here personally. It seems like, as northsider said, they are throwing around cash to stay relevant and hoping they get to cash a nice big lotto check.
Basically my thesis. Filled at $26.50. C'mon lotto check! (big money big money big money no whammy)
I think this makes a lot more sense in general than Tumblr (again, bc I view tumblr as full of teenage venting and porn). I like that this is an actual online business behind some ok technology.
However, I don't love this either because if they buy they'll soon be fighting for content, which is going to be getting much more expensive.
I guess I keep going in circles here. In general, I like the move and this is the type of business Yahoo should be targeting. However, I don't actually like this exact business due to content wars/expenses.
Everytime I consider buying Yahoo, I have something new to doubt.
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