If you’re following this story at all, you’ve probably read that 40 different companies have shown interest in buying Yahoo (YHOO), the parent company of Yahoo Finance.
You’ve probably seen that number somewhere, because it is everywhere. Forty has become the consensus figure for the size of the bidding pool. But that number sounds dubiously high. Where is it coming from? We set out to trace the first instance.
The Wall Street Journal used the 40 figure in a story this week, but only went on to list nine interested companies. It also used the number in an earlier story on March 28, but did not cite it to any source. Business Insider used the number on the same date and cited “recent reports.” At various times, ABC News, CBS News, CNBC, Digiday, IB Times, Marketwatch, The San Francisco Chronicle, The Telegraph, The Week, and Variety, among many more, have all used it. But where did it originate?
The earliest claim we could find of 40 interested buyers was at the New York Post on March 2. “Yahoo,” the story wrote, “has received nearly 40 expressions of interest from prospective bidders including Verizon, AT&T, Time Inc. and ‘every private-equity firm you can think of,’ said one source.” Many other outlets, it appears, ran with it—or the same source has fed them all the same figure. In reality, it’s barely half of what everyone is saying.
From a scouring of every public report, we could find just 23 entities that have been publicly named in the process. Of course, there could be more, since there could be companies that haven’t been outed—but there could also be even fewer, since reports like these are often just rumors.
Here are the players that have been named in the press, plus a little information on which part of the company they might like to buy. Yahoo’s stake in Alibaba is worth around $30 billion; Yahoo Japan is worth nearly $9 billion; and Yahoo’s core internet business, which includes search, mail, and media properties like Yahoo Finance and Yahoo Sports, has been appraised by various outlets at anywhere between $5 billion and $8 billion.
Many outlets have reported based on some crude math that Alibaba (BABA) could buy all of Yahoo almost for free, because after paying a small premium on its shares it would get back Yahoo’s stake in itself. In 2011, Alibaba CEO Jack Ma publicly declared his interest in acquiring Yahoo; now he could finally do it.
Yahoo’s core would be a relatively cheap acquisition for AT&T (T), which bought DirecTV last year. AT&T hasn’t demonstrated the same interest in digital media as Verizon has, but the deal could appeal for video operations: DirecTV has the rights to NFL Sunday Ticket, and Yahoo streamed an NFL game last season; in addition, Yahoo and its media sites have pushed video harder than other media sites have. Buying Yahoo’s Internet business could also be a competitive move by AT&T to match Verizon’s AOL acquisition. Caveat: a new Bloomberg story reports that AT&T and Comcast have lost interest and won’t bid.
With its own expansive media properties, a bid for Yahoo’s core media would make sense for CBS (CBS), which could grow in areas like sports and finance where it already has a strong presence. Back in 2008, CBS bought CNET for similar reasons. Still, the buzz around CBS as a buyer has been far quieter than other potential bidders.
The cable company that owns NBCUniversal would be interested in Yahoo’s media sites for similar reasons to CBS, but it would also want Yahoo’s digital advertising business, which could help boost its own. Last month, Comcast (CMCSA) struck a deal to begin selling its Xfinity Internet TV service through Amazon (AMZN), a sign that the company is in tune to new digital trends and could seek to prove it further by buying Yahoo. (As stated above, a recent Bloomberg report said AT&T and Comcast have lost interest and won’t bid.)
The Daily Mail
Daily Mail & General Trust, the British media company that owns The Daily Mail, sees only 50 million visits per month online, according to Comscore data, while Yahoo’s web portals are way up near the top of the digital media ladder, with more than 200 million views per month. By acquiring the media business, Daily Mail hopes to shoot from bottom to top; a private equity partner would acquire the other parts of Yahoo’s core. There’s another reason Daily Mail makes sense as a buyer: the parent company, DMGT, owns 68% of Euromoney, a finance news company; Yahoo Finance would expand DMGT’s business news holdings further.
Over the years, many have written (including our own Andy Serwer) that ESPN is the lone property that sticks out like a sore thumb in Disney’s (DIS) various holdings. But buying Yahoo’s core business would complement ESPN nicely, and make Disney the king of sports content, bringing ESPN’s biggest competitor in online sports content, Yahoo Sports, under the same umbrella. Disney also owns ABC News, which has a partnership with Yahoo already. Disney was floated as a potential buyer back in 2011, the last time Yahoo looked like it would sell.
When Yahoo turned down Microsoft (MSFT) in 2008, Google (GOOGL) showed interest in a bid. The appeal now is still the same as it was then: advertising revenue from traffic to Yahoo media sites. Alphabet could make a play for Yahoo’s core business, as well as for Yahoo Japan, but at the moment Verizon and Softbank appear to be likelier buyers.
Barry Diller’s InterActiveCorp (IAC) has a broad portfolio of media properties including About.com, Ask.com, College Humor, Dictionary.com, Investopedia and The Daily Beast. Adding Yahoo’s media properties, while expensive, would instantly expand its footprint more than any past media acquisition it has made. (IAC also owns the largest stake in online-dating portfolio Match Group, which spun off publicly last year as Match Inc.)
The tech giant made a $44.6 billion offer for Yahoo back in 2008 that was rejected. Now, according to Re/code, the company has reached out to potential buyers this time to offer financing help. In other words, Microsoft wouldn’t buy Yahoo directly, but as an existing search partner of Yahoo, it has skin in the game and is eager to ensure Yahoo goes to the right company for Microsoft strategically.
Rupert Murdoch’s media giant is a natural possibility because he is always looking to expand his empire. Like Disney because of ESPN, NewsCorp (NWS) could have an interest in Yahoo’s media sites as a way to expand the business and sports coverage it offers through Fox.
Because Softbank (SFTBY) owns big stakes in both Alibaba (37%) and Yahoo Japan (36%), acquiring Yahoo outright could make sense for the Japanese telecom company.
It seems like a stretch that an aging print media company with its own financial problems could afford the purchase, but Time Inc. (TIME) has made other media acquisitions recently, of digital properties like HelloGiggles and xoJane, and reportedly has talked with private equity firms about partnering with it to make a bid for Yahoo’s media business.
Because it bought AOL last year for $4 billion, Verizon (VZ) has emerged as the frontrunner or likeliest buyer in this process. It has shown an interest in turning around ailing digital media properties. Verizon is expected to make an official offer by next week, and would likely be interested in everything but its Alibaba stake.
Private equity and venture capital firms:
Advent International, Andreessen Horowitz, Apax Partners, Bain, Hellman & Friedman, KKR, Silver Lake, TPG, Vista Equity Partners, Warburg Pincus
All of these PE or VC firms have been named in stories, at this point, but the language in a Reuters story is important: These firms, the wire service reported, are “weighing bids.” That does not necessarily mean they have been in touch with Yahoo to actually make a bid. The involvement of PE firms would likely end up being as partners to a larger company that needs backing. Examples have included Time Inc and a PE partner or Microsoft, Silver Lake, and Andreessen Horowitz as a consortium.
Yahoo corporate communications declined to comment on how many buyers have been in touch. “The Company does not intend to make any further disclosure regarding these matters until a definitive transaction agreement is reached,” it said in a February statement.
Yahoo has set a deadline of April 18 to receive all bids from prospective buyers.
Did we miss any? Tell us in the comments.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.