Just days after a report noting that Verizon was talking to AOL about a potential acquisition or partnership, Starboard Value -- which owns a significant stake in Yahoo -- has sent a letter to CEO Marissa Mayer advising her to “reconsider a merger with AOL.”
Yahoo-AOL merger talk is nearly a decade old, and whether or not pressure -- either perceived or real -- from investors will spark a fire remains to be seen. Nobody will blame you if you don't get excited about this latest chapter in the "Yahoo and AOL should merge" story. What's that they say about the boy who cried wolf?
Regardless, it’s interesting to find both AOL and Yahoo attached to M&A speculation for the second time in one week. Media Daily News speculates that despite Verizon’s CEO “reject[ing] the rumor of an AOL bid … perhaps it made investors at Starboard a bit jumpy.”
In fact, that’s exactly what IBISWorld analyst Sarah Kahn predicted would happen.
“Any Verizon-AOL deal, and even simple rumors of a deal, is expected to trigger a race among other industry players to invest their capital and research on mobile video consumption and advertising as well,” Kahn wrote in a note on Tuesday.
Except we shouldn’t call it prophecy fulfilled; “mobile video” would not be the underpinning of a AOL-Yahoo merger. However, Yahoo has been making some noise in the mobile ad space.
The company first reported mobile ad revenues in October 2014, per eMarketer, “which [were] substantial enough to put them into the mix as a competitor.” eMarketer notes that Yahoo’s share of worldwide mobile ad spend is 1.8%, calling it "small, but significant." In addition, eMarketer says Yahoo is currently gaining ground on Twitter in the U.S. mobile ad market and is "poised to pass Twitter in U.S. mobile ad share by 2015.”
That is, of course, unless Twitter buys Yahoo. That’s what Yahoo’s former intern CEO Ross Levinsohn suggested should happen on CNBC earlier this week.
“I think Twitter should go buy Yahoo,” Levinsohn said. “If you put Twitter and Yahoo together, it would be the most powerful force in the media business.”
There may not be much weight behind Levinsohn's thoughts -- or much reality, as Twitter would need to find a well of cash to pull the hypothetical deal off, per the Wall Street Journal -- but there's no denying there would be weight behind the deal itself. Then again, any of the potential deals talked about this week would be momentous.
AOL and Yahoo combined invested over $1 billion to acquire programmatic video ad platforms in the past 18 months. Just over one year ago, Twitter spent $350 million in stock to acquire a mobile ad exchange. And those are just the big ticket ad tech items; the companies also have proprietary technology and have invested in other firms. And per Bloomberg, which first reported Verizon’s interest in AOL, the telco is “primarily interested in AOL’s programmatic advertising technology.”
Verizon-AOL? Yahoo-AOL? Twitter-Yahoo?
Okay -- maybe not that last one, but the first week of 2015 has not been dull when it comes to speculated M&As that would have a significant impact on the ad tech landscape.