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20 May 2007

Bebo/YHOO: My Rumor’s Bigger Than Yours

by: Ashkan Karbasfrooshan

A couple of weeks ago, eBay was said to buy Stumble Upon, sort of.

Last week, CBS bought Wallstrip, sort of.

Today, Yahoo!’s buying Bebo, according to the Telegraph, sort of.

I met Michael and Xochi Birch at EconSM. Nice folks. Happy for them if the deal goes through. Well, that’s if you think of Friendster’s fate, who passed on an offer from Google that would now be worth well over $1B had they accepted. If you think of MySpace or Facebook’s fate, then Bebo should not sell, given the red hot UK ad market. As a YHOO shareholder, I think I’d like this deal to go through because a) YHOO would get a nifty social network and b) a great shot in the arm in the UK.

Paid Content points out that Toby Coppel - YHOO’s former dealmaker - is now its Head of Europe, so this sounds like it could all be true, but PC also points out that the Telegraph’s report is indeed highly speculative, since it’s a UK based newspaper reporting based on “Silicon Valley” rumors. Yeah, highly credible.

Either way, the consolidation continues. Next thing you know, something crazy will happen like News Corp. trying to take over Mojo Supreme… For a look at publicly traded firms that might be on the radar of buyers, click here.

All to say, I doubt YHOO would be looking for more “unsellable” inventory (social networks yield lower ad rates) had it not bought Right Media, but given YHOO’s willingness to up the market value of Right Media from $200M to $800M in less than a year in successive deals, something tells me that this auction bidding ad inventory management is panning out. Of course, knowing YHOO, they might find a way to mess that up, but the point is that Bebo is a nice social network, run by smart people, positioned well in the space (a cross between MySpace and Facebook, is how Birch described it) and extremely well in the UK… and if via Right Media YHOO can monetize all inventory - even the longest of tails, then this could be a shrewd move.