Yahoo! fortifies online ad buy
Acquires last 80% of Right Media for $680 milYahoo! Inc. said Monday that it will pay $680 million for the 80% of online advertising company Right Media that it doesn't already own, a purchase that industry observers likened to Google's agreement to buy DoubleClick for $3.1 billion.
Yahoo! last invested in privately held Right Media in October in a deal that reportedly valued the entire company at just $200 million, while analysts said the purchase of the rest of the company makes Right Media worth $850 million.
Yahoo! CFO Sue Decker told analysts during a conference call Monday that Right Media's worth to Yahoo! swells considerably when it becomes a wholly owned asset as opposed to a mere partner.
Part of that valuation increase also can be attributed to Google's intention to pay about 50% more for DoubleClick than the sum Microsoft was rumored to have offered.
Both DoubleClick and Right Media are players in the online display advertising game, where Yahoo! dominates. Google rules the larger search-advertising space but, with DoubleClick, intends on mounting a more determined challenge to Yahoo! in display ads.
Among other products, Right Media operates an advertising exchange, which connects buyers and sellers of online ads with Right Media taking about a 7% fee on each deal. The exchange has attracted about 19,000 advertisers, and DoubleClick has announced it will create a competing product.
Google's purchase of DoubleClick and Yahoo!'s buy of Right Media and, before that, of AdInterax, has kept analysts guessing as to which online advertising company will be snapped up next.
Often mentioned as takeover candidates are ValueClick, aQuantive and 24/7 Real Media. Shares of each have been climbing lately but fell Monday, possibly on the realization that one major potential purchaser, Yahoo! has focused its attention on Right Media.
The prices paid for Right Media and DoubleClick can be considered rich, with the former expected to generate only $70 million in revenue this year and possibly no profit. DoubleClick's annual revenue is about $350 million.
Yahoo!'s acquisition of Right Media will close in the second or third quarter, the company said. "It will help Yahoo! drive more value for more advertisers, publishers and partners than any other company," Yahoo! CEO Terry Semel said.
Yahoo! also announced it entered into a multiyear partnership for handling the sales of online display and video advertising services for Comcast.net, which gets about 15 million unique visitors per month.
And Yahoo! said it will launch an advertising campaign of its own, unveiling its "Be a Better …" slogan, which encourages Web surfers to be better at an array of activities through Yahoo! services. Television and radio commercials began running Monday.