Yahoo Gets a Boost on Rumors of a Possible Suitor
Fresh speculation that leading Internet portal Yahoo Inc. may have a suitor helped push the stock up nearly 11% on Wednesday.
The rumored potential buyer: Viacom Inc., the world’s third-largest media company.
Yahoo (ticker symbol: YHOO) rose $2.88 to $30.25 on Nasdaq in heavy trading. Viacom’s Class A shares (VIA) gained 81 cents to $57.69 on the New York Stock Exchange.
America Online’s acquisition of Time Warner last week, after a year of regulatory scrutiny, is driving speculation that other media companies will buy choice Internet businesses as well, said Bear, Stearns & Co. analyst Jeff Fieler.
“A lot of people think that the AOL Time Warner deal, now that it’s complete, is putting pressure on other media companies to catch up,” Fieler said.
AOL’s purchase of Time Warner combined the world’s largest Internet service with the world’s largest media company. It gave AOL access to articles from Time Inc. magazines, music and films from the Warner Bros. studios and content produced by Time Warner cable networks, including CNN.
The purchase could prompt Time Warner competitors such as Viacom to pursue their own acquisitions as they seek a bigger audience on the Internet for their content, analysts said.
Yahoo, owner of the second-most-used group of Web sites after AOL’s, might be seen as an inexpensive company to buy, Fieler said. Yahoo stock has fallen more than 80% over the last year, as the Net stock boom went bust. The company has a market value of about $17 billion.
Viacom owns the CBS-TV network, Paramount Pictures film studio and cable networks, including MTV and VH1. The company has been mentioned before as a potential bidder for Yahoo.
But Yahoo, which declined comment on Wednesday’s rumors, has often stated its intention to remain independent and has pursued media deals with various companies, rather than partnering with one, as part of its strategy to offer a wide range of online content.
Fieler said folding Yahoo into a larger company could limit its growth potential. “I believe Yahoo is more valuable as an independent aggregator of content,” he said.
