Yahoo Rejects Microsoft in Favour of Buying Maven
Yahoo just announced that they were not going to take Microsoft’s offer for a buyout. Instead in a surprise move they bought out Maven Networks Inc. for $160 million. The idea is that Yahoo will take over Maven as it is an online video advertiser and create a major marketing coup in being able to supply videos and other media. Maven is located in Cambridge Massachusetts where they deliver video and ads for several media companies such as News Corps Fox News, Sony Pictures and CBS’s sports. The deal was announced just a day after the refusal of Microsoft’s offer for a takeover of $44.6 billion. Microsoft instead announced that they would be buying out Danger Inc. This is a Palo Alto company for mobile handsets.
It seems that Yahoo will not mention whether they paid for the buyout of Maven with stocks or cash. It could be that they paid in stocks in order to get the company, but no confirmation can be found. Analysts are still wondering if Microsoft will finally have a bid that wins out against those at Microsoft. Many think eventually that Yahoo will accept a buy from Microsoft, but instead of a billion dollar deal it may be a share offer instead.
Bill Miller has the second largest amount of shares in Yahoo at the moment and is the fund manager for Legg Mason. He wrote a letter Tuesday that Yahoo would have trouble soon if they don’t find an alternative to Microsoft’s offer to buy them out. It seems that Microsoft may eventually pay for the company as they will be the only company to offer enough.
Yahoo has expanded online advertising in the last year with an aggressive stance. They have purchased Blue Lithium and Right Media in the hopes of gaining more online advertising, which could explain the current position of the company, in that they have expanded a great deal in the last few years.
E Marketer Inc is expected to grow online as well. They believe the video online advertising will grow to 4.3 billion US dollars in 2011 from the $775 million they had in 2007.
The thought is with more and more individuals watching television online and other entertainment on the web that the major media company will be able to expand and that Yahoo will of course rally against any buyout deals being offered. It is definitely a priority for Yahoo to get the media videos online to their websites in order to gain from them.
Cheryl Kellond is the senior director at Yahoo for the global ad market and believes that at least 20% of online displays in the next three years will be video advertising for businesses. Yahoo is trying to boost their revenue in the advertising market in order to get more revenue coming in as well as getting a better relationship with the entertainment and media companies to start broadcasting in that manner as well. They are hoping to increase their worth in better technology for their programs. At the moment however Maven will continue to work as a subsidiary for Yahoo.
Maven has been able to get about $30 million in funding for their media advertising online. The funding has come from Prism Venture Partners, Accel Partners, and General Catalyst Partners. The transactions currently under way are making both companies happier in the projections for the new years as well as what is to come. Yahoo is trying to catch up to Google. Google has surpassed Yahoo for the last few years and taken many of the customers using Yahoo away.