Yahoo’s sports and financial businesses boosted Apollo’s plan


Apollo, the private equity firm, believes it has finally figured out a way to deliver on Yahoo’s promises.

But after this ancient and declining online pioneer has become the graveyard of the reputation of a series of media and technology industry leaders, it may not be too early to succeed.

New York-based investment company Agreed earlier this week Verizon, a payment communications giant, acquired Yahoo, AOL, and a series of other digital media assets it has accumulated for $5 billion.

Compared with Microsoft’s rejection of Yahoo’s $44.6 billion takeover offer 15 years ago, the deal appears to be a steal. Microsoft hopes that it can use this Internet portal company to build an online platform that can compete with Google, which Google sees as a major threat to its software advantages.

This has also become the shadow of Yahoo’s stock market value in the following years, when Yahoo has become the target of repeated proposals by private equity companies seeking to buy and spin-off the company. Most people have set their sights on Yahoo’s stake in the Chinese e-commerce company Alibaba (Alibaba), which has gradually diminished the value of Yahoo’s own business.

And this is only more than half of Verizon’s acquisition of Yahoo in 2017, plus the AOL business it bought two years ago. The project’s former Google executive Tim Armstrong (Tim Armstrong) believes that he can create an advertising platform to compete with Google and Facebook.

The sheer scale of Yahoo’s online users is behind many of these dreams. Judging by the number of visitors and the time spent on the site, according to data from the web evaluation company Alexa, it is still the fifth most popular website in the world outside of China.

In a sense, Apollo’s interest in the company is no different. David Sambur, co-head of Apollo’s private equity division, said that Yahoo’s 900 million monthly active users constitute a “large audience” and provide users with “tens of thousands of opportunities. “. At a price of a little more than $5 per user, the purchase price is a bargain for Internet transactions.

However, compared with other potential buyers, Yahoo’s latest owners have a narrower business scope: select some promising properties from Yahoo’s portfolio, give more support, and get rid of excessive reliance on advertising to make a fortune. It is implied but self-evident that the parts of Yahoo’s business that are no longer considered core and the people employed in it have been rejected.

Yahoo has two long-standing problems. Brian Wieser, who has been a Yahoo Internet analyst for many years, said that one of them was that the previous leader failed to hone his attention or was unable to invest enough money on the company’s best opportunities. He said that coupled with the silos of the company’s operations, this has led to it spanning many different markets.This criticism led an executive to warn in a famous internal memo ten and a half years ago that his strategy was Spread it thinly like peanut butter.

Yahoo is still processing this legacy. For example, Yahoo Answers was closed on Tuesday, a question-and-answer service that has been plagued for many years, even though it has lost some time in updating the service. A former Yahoo executive said that sites like this still attract millions of users and attract an enthusiastic user community, which means the company is too slow to shut it down.

The second related failure was the company’s inability to solve a fundamental problem: whether it was primarily a media company or a technology company. This issue first attracted attention during the tenure of former film executive Terry Semel. Terry Semel operated the company after the dot-com bubble burst and pushed it online. The media, thereby operating the company.

When the strategy failed, the company’s board tried to change direction by hiring Marissa Mayer, Google’s former senior product manager. However, although some of her actions have received positive reviews and she brought Yahoo to social media through the acquisition of Tumblr, none of them can match Yahoo’s main competitors.

Two people familiar with the matter said Armstrong’s own plans for Yahoo also put it in an uncomfortable position across the world of technology and media.

His stated goal is to combine it with AOL to create an “adtech” platform that can compete with giants such as Google. One person said, but his real interest lies in the group’s extensive media asset portfolio. Another said that after Yahoo was acquired by Verizon, the company’s focus inevitably shifted to New York, thereby reducing the influence of the company’s developers on its development direction.

Apollo’s intentions with Yahoo hinted at partial answers to these long-standing questions. The most important of these is to increase attention to markets where Yahoo already has a strong influence, and to develop new forms of revenue in addition to advertising.

Sports betting tops the list. The former official said that Yahoo has worked for years to eliminate regulatory barriers and formed an alliance with MGM in 2019 to provide services to the millions of users participating in its fantasy sports league.

Apollo now claims that its huge foothold in the gambling world puts it in a good position to transform Yahoo Sports into a powerful online gaming and sports betting platform. This investment company acquired competitor US acquisition group TPG for $31 billion in 2008 and acquired Harrah’s Entertainment, the largest gaming empire in the United States. Although the company was later renamed Caesars, Then went bankrupt. It also took over Gala Coral in 2010 and later merged with Ladbrokes to become rival British rival bookmaker William Hill.

Recently, Apollo acquired the operations of Las Vegas Sands Casino and Casino The Venetian for US$2.25 billion, the operations of Great Canada Gaming and the Italian sports betting group Gamenet for US$2.5 billion. Operations.

“Apollo has extensive experience in gaming and sports betting. I think we are fully prepared to maximize the value of Yahoo Sports opportunities,” Sambur said.

Daily newsletter

#techFT brings you the information, comments and analysis of experts from all over the world, which affect the industry’s fastest-growing large companies, technologies and issues. click here Get #techFT in your inbox.

Yahoo Finance, which has long been the company’s crown jewel, may provide another opportunity to go beyond advertising. Apollo (Apollo) is considering expanding potential businesses, including providing opportunities for the use of financial services products, to attract a larger audience, which currently consists of retail investors using free trading tools and news streams.

Sambur said: “Using this brand, I see a big opportunity to take advantage of their huge user base in other financial-related fields to profit.” The private equity firm is studying whether it can turn Yahoo Finance into More profitable things, such as stockbrokers like Robinhood, or whether you can get involved in the cryptocurrency business.

But even if Apollo uses such openings to surpass advertising, it still needs to succeed where previous Yahoo owners failed: in competition with Google, Facebook, and Amazon, attracting its enviable audience to be more attractive. The attractiveness of advertisers.

Samper said: “There is a lot of space between us and these people.” “The market is so big that closing the gap can even create tremendous value.”

Additional reporting by Anna Nicolaou



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *