Commentary

Verizon Becomes Lead Bidder For Yahoo, Per Report

"Hi, my name is [fill in the blank], and I now work at Verizon," said a Yahoo executive at an industry event earlier this year. This person was only kidding, of course, when he said this in a room full of people during an advertising industry event. Was it a premonition or just some good old-fashioned analytical deduction? Perhaps just a best guess.

Apparently, the world should know soon just how true that statement rings. Bloomberg reports that Yahoo is nearing a deal with Verizon, the announcement expected within the next few days. While Verizon put in a low bid early on, the price the company is now willing to pay nears close to $5 billion for Yahoo's core business, which includes search. Reports suggest there are still five bidders, a variety of companies and investment firms.

The deal will end one of the longest bid processes ever, according to some, but Verizon won't have an easy go of it. Even with partnerships with Apple, Bing, Google, Mozilla and Oracle, Yahoo is struggling through the turnaround. While Yahoo reported that second-quarter 2016 revenue rose 5% to $1.3 billion, display revenue and search revenue fell overall. The impact related to its Microsoft search partnership added $252 million to revenue, otherwise GAAP revenue would have been $1,055 million, down 15% from Q2 2015.

Bloomberg also reports that Verizon is not interested in Excalibur, Yahoo's IP portfolio, which Seattle-based TurboPatent deems mostly "invalid" and "unenforceable." 

Innography, which has uncovered details to better understand the stakes and value of the Excalibur portfolio, estimates that search patents in Excalibur comprise the majority of the portfolio, with online advertising between 15% and 20%, and mobile between 10% and 20%.

This will not be the last acquisition Verizon makes to build out its advertising business. Bloomberg the company plans to build an advertising empire, all rolled up into CEO Tim Armstrong's AOL business, from native, display and video, to search. 

Verizon reports earnings on Tuesday.

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About the Author

Laurie Sullivan is a writer and editor for MediaPost. You can reach Laurie at lauriesullivan@gmail.com.