Marissa Mayer Has Surprising Interest In Buying A Cable Channel, Yahoo Sources Say (YHOO)

Here is a perhaps crazy idea that sources tell us Yahoo CEO Marissa Mayer and her top executives have considered for saving the company: buying cable networks.

Here’s what we’re comfortable reporting:

  • For sure, Mayer and Yahoo considered acquiring Scripps Networks Interactive. Yahoo considered Scripps during a period in time when Mayer and other executives thought Yahoo would have billions of dollars to spend following the 2014 IPO of Alibaba, a company Yahoo invested in back in 2005. Scripps is the $10 billion parent company to seven cable channels including HGTV, the Food Network, and the Travel Channel. We’ve heard this from two sources, former Yahoos.
  • Yahoo may have actually begun M&A discussions with Scripps regarding at least two potential deals. A Yahoo source tells us the company entered into “talks” with Scripps in order to acquire the Food Network. After these “talks” began, the possibility that Yahoo might acquire all of Scripps entered into the conversations, this source says. We’ve been unable to corroborate these details with other Yahoo sources.
  • Yahoo may have interest in buying CNN. A media industry source close to Yahoo executives says there were “pretty active” rumors over the summer that Yahoo wanted to buy CNN from Time Warner. Buying CNN would cost Yahoo something like $5 billion or $6 billion, this source speculates.

A source with firsthand knowledge of Yahoo’s interest in Scripps explained it to us.

  • Many of Scripps’s media brands fit Yahoo’s most in-demand demographic: women who are 25 or 35 and older.
  • Scripps has “super brand-friendly content.”
  • Food Network shows are “relatively evergreen” — a show about making pasta that was created in 2010 will still be watchable for viewers, and worth sponsoring for advertisers, in 2015.
  • Yahoo would be able to distribute some of the original content it’s already producing across the various channels.
  • Yahoo’s sales force would be able to bundle TV ads with Web ads, and thereby theoretically charge a higher rate for both.
  • Owning cable networks makes it less risky for Yahoo to create Netflix-like long-form content. If the shows don’t work on the Web, at least they’ll have a home on TV.

Earlier this week, Tom Dolan of The Information wrote a post speculating that Yahoo would soon acquire CNN.

He wrote that “some sort of deal” between a tech company and a cable company “is preordained.”


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