Digital media and magazine publisher Time Inc. is rumored to buy Yahoo’s core business according to a Bloomberg report. The $1.5 billion publishing company Time Inc., whose publications include Time, People, Sports Illustrated, and Fortune has heard a presentation from Citigroup bankers on pursuing a deal with Yahoo.
Time Inc. is interested in obtaining Yahoo’s digital reach of over 1 billion users around the world. The company has been struggling for the past 12 months with shares dropping 29% and pressure is being put on Marissa Mayer to explore the option of selling the company.
If the rumor is true Time Inc would have some stiff rivals to compete against. AT&T and Version have both shown interest in their push to get into the web not to mention several years back Microsoft was looking to purchase the entire company. This would put Time at a disadvantage in terms of capital if it has to face this kind of competition.
It’s also important to note that Time Inc. is much smaller than Yahoo and it is from a different industry but this hasn’t stopped the company before. Time announced earlier this month that is was going to purchase Viant Technology (the parent company of MySpace) so it would be able to sell more targeted advertising spaces (to the whole 10 people on MySpace).
Some argue though that Time while not large is still the perfect size to merge with Yahoo and for it to still work. Which makes sense, in a situation where you are merging 2 extremely large companies with thousands of employees there is a lot that could go wrong and it can take a very long time to assess the situation. With Time being a smaller company it might be possible to manage Yahoo (by basically letting it go as it is).
“Marketers are selecting media partners that have either data-driven capabilities or premium content,” Ripp said. “We will be able to deliver both in a single platform and will stand apart from those that offer just one or the other.”
Time Inc’s plan to purchase Yahoo’s search engine business would be a smart way for the Time to gain some interesting user data. As for Yahoo it would leave the company to basically nothing as its been shutting down a lot of its own service in a poor attempt to cut costs.