Verizon, Yahoo a good match?
Analysts cite three reasons why a deal would work
Verizon and Yahoo could be a match made in heaven, say analysts, citing three reasons.
Verizon is a broadband and telecommunications company best known for its wireless services. Yahoo is a struggling Internet company best known for its very public decline.
The two could be a match made in heaven, according to tech and media industry analysts.
With the rumor mill buzzing about who might put in a bid for Yahoo, Bloomberg reported Thursday that Verizon plans to make an offer next week to snap up the Sunnyvale, Calif., company’s core business and its stake in Yahoo Japan.
Although Verizon stayed mum on its intentions, analysts believe the New York company is a logical buyer for Yahoo.
Here are a few reasons why:
Media mentality: Verizon has made bold moves over the last year to transform itself into a media company.
It acquired AOL, which like Yahoo was an Internet pioneer that attempted to reinvent itself as a hub for editorial content through sites such as the Huffington Post and TechCrunch.
This week, it agreed to buy a 24.5% stake in AwesomenessTV, a digital video firm with a YouTube channel popular among young viewers.
Yahoo produces plenty of editorial content — a strategy bolstered by Chief Executive Marissa Mayer. Sites like Yahoo Finance and Yahoo Sports drive significant traffic, while video from Yahoo talent, including Katie Couric, could complement Verizon’s growing media reach.
Yahoo still commands a huge audience. Nearly 1 billion people visit a Yahoo website every month.
While content is a risky business, analysts believe it’s a way to keep customers engaged.
“Verizon is looking to the future,” said Brett Sappington, director of research of consulting firm Parks Associates. “It’s about being able to create an audience, and increasingly that audience is going to mobile and moving away from traditional forms of media.”
Adding advertising: Editorial content attracts attention — but without advertising it doesn’t make money.
Like AOL, Yahoo boasts a sizable and sophisticated digital advertising business, which Verizon could use to develop new revenue.
“Verizon is interested in being in the advertising data side of the business,” Sappington said.
Though Yahoo has struggled to turn its media business into a lucrative unit, analysts suggest Verizon might see potential in combining its forces with AOL’s ad team.
Monetizing mobile: Wireless remains Verizon’s bread and butter. So it makes sense the company would look for ways to monetize that part of its business.
Analysts wonder if whether Verizon might use content as a way to increase its wireless subscribers’ data usage.
Yahoo, for instance, is one of many Internet firms edging into the streaming video market.
Last year, it live-streamed an NFL game, and this year Yahoo Sports will air 180 baseball games.
Perhaps such offerings could serve as something of a Trojan horse to increase data consumption.