Seven ponders future of Yahoo7 partnership after Verizon buys-out Yahoo

The deal by US telecommunications giant Verizon to buy Yahoo will have a major impact on the Australian market, possibly proving the nail in the coffin of the decade-long partnership between Seven and Yahoo.


Verizon and Yahoo confirmed the deal overnight in the US, with Verizon acquiring Yahoo’s operating business for $US4.83b with plans to merge the business with AOL, which it acquired a year ago.

Verizon chairman and CEO, Lowell McAdam, said acquiring AOL gave Verizon new capabilities, creating “cross-screen connections for consumers, creators and advertisers” and the addition of Yahoo and its content would put the company on the global map.

“The acquisition of Yahoo will put Verizon in a highly-competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising,” McAdam said.

But the move leaves major question marks around the relationship between Yahoo, the Seven West Media Group and the joint venture Yahoo7, with the pair already appearing to be in the throes of unstitching their relationship.

Nine bought its way out of the 50/50 joint venture with Microsoft in Ninemsn in 2014 and renamed its website earlier this year.

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In a statement to the ASX, Seven said it would use the time between now and the completion of the deal in Q1 2017 to consider a range of options that exist under the current terms, to work out which would create the most value for Seven West Media shareholders.

The company said it looked forward to discussing Verizon’s plans for Yahoo, but noted: “Seven West Media has a number of positive options that will define its future development and success in digital media, building on its already highly successful development over the past few years”.

It highlighted the success of the joint-venture over the past 10 years, with each party bring a specialty to the business and how much development Seven had experienced with its own digital properties.

“Beyond the joint-venture, Seven West Media has dramatically expanded its digital products, audience and investments and now leads the Australian market in the creation and distribution of digital, premium video content beyond broadcast television,” the statement said.

“Seven West Media also operates and creates unique content for social, ecommerce and mobile platforms. This includes its premium 7Tennis product for the Australian Open Series. Next week, it will launch its new Olympics on 7 app for the Rio Olympic Games. The Seven Network live-streams all programs and channels. Beyond these moves, its rapidly growing digital publishing consumer brands are now all housed digitally within Pacific.”

The decision by Seven to bring the digital content of Pacific in-house prompted Yahoo7 to launch its own lifestyle and entertainment offering, Be.

Seven said it would be business as usual while the transaction was being completed.

Yahoo7 declined to comment on the future of the relationship or how the merger with AOL would play out in Australia.

Overnight, Yahoo Inc., announced an agreement with Verizon to acquire Yahoo’s operating business. This complex transaction will take many months and we will not see this agreement close until Q1 2017,” Yahoo7 said, in a statement.

“In the meantime, for Yahoo7 it’s business as usual as we continue our commitment to our 2016 strategic plan which is focused on innovation in mobile, video, native and social, as we look as we look to continue to deliver outstanding experiences for our audiences.”

For its part, Verizon offers enterprise solutions in Australia, working with business and government.

Marissa Mayer, CEO of Yahoo, said the deal would see the remainder of Yahoo that was not sold to Verizon retain its assets in Japan and its investment in Alibaba. The business will be renamed after the sale.

“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL,” Mayer said.


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