Looks like the what will Yahoo! do rumor mill is ramping up, again.
This time around, it’s something that seemed unthinkable just a year ago: for Google to power Yahoo!’s ads.
Yahoo! is now sitting at a low of $31B in market cap. The options that we’ve looked at, being:
- status quo
- merger with eBay
- acquisition by/merger with Microsoft
- taken private
don’t make sense because Yahoo! is walking wounded, despite being extremely popular with advertisers nonetheless.
Some time ago, I asked could Google buy Yahoo! Obviously this would raise the ire of antitrust folks because the combined entity would have 80% market share in search.
Of course, by partnering up, instead of selling, Yahoo! and Google stay off the radar of the feds and Yahoo! adds a billion or so to the bottom line thanks to Google’s improved monetization. I guess that’s the cost of swallowing your pride.
Disclaimer: Long YHOO
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WatchMojo NewsletterIn 2006 and 2007, a lot of video content companies raised a lot of money in additional roundings. Heavy.com, which aggregates more than they produce, raised $20M on top of $10M. Others raised $32M on an additional $5M, for example.
I always wondered where investors got their comparables to justify those investments, but more power to the management teams for raising that much. Hopefully they can exit at high enough levels (ie. not pull a Movielink, basically, which sold for $20M after getting $100M in investment).
This year, we’ve seen more video startups raise substantial sums of money:
- Digital Production Studio Worldwide Biggies Receives $9 Million In Funding
- MyDamnedChannel Launched, Copies Funnyordie, Scores Funding
- Revision3 raises $8M in funding
- NewTeeVee Raises $8M financing
As the executive producer of a video producing property at WatchMojo.com, when I see that, it gives some kind of multiple for fundraising purposes… but in an M&A, how does financing affect valuation?
On the one hand, there is a clear difference between an on-the-paper valuation two parties agree to in order to raise money and grow a company… but it’s also unreasonable to assume absolutely no linear relationship between what companies get valued in financing rounds and sales, no? After all, when you determine a valuation for a company, you look at publicly traded and private companies as well as M&A. Sure, it’s awfully unfair to compare a private startup with an established publicly traded company (no matter what kind of liquidity discount you apply) but nowadays, companies tend to avoid the IPO altogether and simply sell out, so maybe private financing rounds’ valuation is a good barometer. I won’t lie, if it is, it’s fantastic for our business…
I need to do some homework on this, if anyone’s got insight, comment away or email me at ash@mojosupreme.com.
[Disclaimer: Veoh is one of the companies we partner with on the distribution of our video archive. We just signed the deal, have yet to ramp up… but thought I should mention that.]
When Veoh raised $40M from a cornucopia of investors including Goldman Sachs, an investment banker acquaintance of mine asked what it could possibly do with all that money. I stressed that YouTube, despite all of their traffic, only generated some $15M in revenues in all of 2006, even though their inventory merited them making $7.5M per month… alas, I also stressed that the costs of hosting videos adds up quickly as you scale. That’s one negative of scaling in the video content business, I presume.
Anyway, mainly, I told him, legal. Look at how much YouTube saved its skin by selling to Google and having Google battalion of lawyers stand up for it against Viacom and others.
I’m not commenting on the merit of matters, but if you have to choose between filing a defensive lawsuit against Universal Music for threatening to sue you, or waiting to be sued and working your way out of the corner, it might be brazen, it might be bold, but it’s the legally smart (and cheaper) thing to do. You set the facts on the face of the record and force Universal to work backwards.
Of course, UMG has much, much more than $40M and it has a lot more to lose, so this could naturally backfire.
