Private-equity fund Apollo believes it has finally come up with a way to monetize Yahoo’s promises.
But it probably won’t cost money to succeed soon after the venerable but declining online pioneer has become a graveyard of inheritance reputation for media and technology leaders.
New York-based investment company Agreed earlier this week Pay Yahoo $ 5 billion to telecommunications giant Verizon, pay AOL and a collection of other digital media properties it has accumulated.
The deal looks like a theft when compared to Yahoo’s $ 44.6 billion offer from Microsoft, which it rejected 15 years ago. Microsoft wanted to use Internet portals to build an online platform comparable to Google, which was considered a major threat to software advantage.
It is also a shadow of Yahoo’s stock market value in the years following being the target of repeated overtures from private equity companies that Yahoo is about to buy and dissolve. Most people were looking at Yahoo’s stock in China’s e-commerce company Alibaba. Alibaba has masked the declining value of Yahoo’s own business.
And it’s more than half the amount Verizon paid to Yahoo in 2017, combined with the AOL business it acquired two years ago. Former Google executive Tim Armstrong behind the plan believed he could create an advertising platform comparable to Google and Facebook.
The vast size of Yahoo’s online audience is behind many of these dreams. Outside of China, web measurement firm Alexa still ranks it as the fifth most popular website in the world, judging by the combination of visitor count and time spent on the site.
In a sense, Apollo’s interest in the company is the same. David Sambur, co-head of Apollo’s private equity fund, said Yahoo’s 900 million monthly active users represent a “huge audience” that brings “huge opportunities.” At just over $ 5 per user, the purchase price is a bargain from an internet trading perspective.
But compared to other potential buyers, Yahoo’s latest owners are starting with a narrower focus. Pick a few promising properties from Yahoo’s portfolio, put more weight behind them, and break away from the heavy reliance on failed ads. Lift that fate. Implicit, but unspoken, is the rejection of parts of Yahoo’s business that are no longer considered core and the people employed by them.
Two long-standing problems weigh heavily on Yahoo. One was that successive leaders couldn’t focus or invest enough behind the company’s best opportunities, said Brian Wieser, who had long covered Yahoo as an internet analyst. I will. Coupled with the company’s silos, he said, this led to a huge number of different markets.Due to the criticism, one executive wrote a famous internal memo 10 and a half years ago, and the strategy was Spread thinly like peanut butter.
Yahoo is still dealing with that legacy. For example, this Tuesday, Yahoo Answers will be closed. This is a long-standing question-and-answer service, despite losing the foundation of the new service. Such sites still attract millions of users and an enthusiastic user community. In other words, the company’s actions are too slow to shut down users.
The second related failure was that the company was unable to resolve the underlying question. It’s mainly a media company or a technology company. That question first came to light during the tenure of former movie executive Terry Semel, who ran the company after the bankruptcy of dot-com and slammed into online media.
When that strategy failed, the company’s board tried to reverse the course by hiring Marissa Mayer, a former top product manager at Google. However, some of her initiatives have generated positive reviews and brought Yahoo to social media with the acquisition of Tumblr, but none have achieved the scale and momentum of the company’s major rivals.
Armstrong’s own Yahoo plans were also placed in an unpleasant position across the world of technology and media, according to two people who closely observed his efforts.
His declared purpose was to combine it with AOL to create an “ad tech” platform that could rival giants such as Google. But his real interest was in the group’s broad portfolio of media properties. Another said that after Yahoo was acquired by Verizon, the company’s center of gravity inevitably moved to New York, reducing its impact on the direction of its developers.
Apollo’s intentions for Yahoo suggest partial answers to some of these long-standing problems. The most important of these is to strengthen our focus on markets where Yahoo already has a strong presence and develop new forms of revenue that go beyond advertising.
Sports betting is at the top of the list. For years, Yahoo has been clearing regulatory hurdles and betting, according to former sources, to serve millions of users in the fantasy sports league. We partnered with MGM in 2019.
Apollo now claims that its considerable foothold in the gambling world is in a good position to turn Yahoo Sports into a powerful online gaming and sports betting platform. The investment company acquired Harrah’s Entertainment, the largest US game empire in rival buyout group TPG, for $ 31 billion in 2008, but the company, later renamed Caesars, later went bankrupt. It also acquired Gala Coral in 2010 and later integrated with Ladbroke Grove to rival British competing bookmaker William Hill.
More recently, Apollo has acquired Las Vegas Sands Marquee Resort and Casino Venetian for $ 2.25 billion and Great Canadian Gaming for $ 2.5 billion, the Italian sports betting group Gamenet.
“Apollo has a lot of experience in games and sports betting, and I think we’re in a good position to maximize the value of Yahoo Sports’ opportunities,” says Sambur.
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Yahoo Finance, one of the company’s best gems for a long time, has the potential to offer another opportunity beyond advertising. Apollo has the potential to build more profitable businesses, such as providing access to financial services products, so it is a huge group of retail investors who currently use free trading tools and news streams. We are considering leveraging a large audience.
“I see great opportunities to use that brand to monetize their tremendous user base in other areas related to finance,” Sambur said. Private-equity firms are looking for ways to turn Yahoo Finance into something more lucrative, such as a stockbroker like Robinhood, or to delve into the cryptocurrency business.
But even if you use these openings to go beyond advertising, Apollo needs to succeed even if the previous Yahoo owner fails. In short, it turns your enviable audience into a more attractive attraction for advertisers competing with Google, Facebook, and Amazon.
“There’s a lot of room between where we are and where they are,” Sambur said. “This market is so big that bridging any gaps will create tremendous value.”
Additional report by Anna Nicolaou
Yahoo sports and financial flows drive Apollo’s plans
Source link Yahoo sports and financial flows drive Apollo’s plans