Yahoo! to acquire Broadcast.com as the Internet leans towards audio and video streaming

Weekly Corporate Growth Report, Apr 12, 1999

The Deal: In a deal that will position it for the rapid shift to high-speed, multimedia Internet services, Yahoo! has agreed to acquire Broadcast.com, the Web's No. 1 audiovideo provider, in a pooling-of-interests deal valued at $5.7 billion, or $130/share. Terms call for Yahoo! to trade 0.77 share of its common stock for each share of Broadcast.com. The price is well above the $110 to $120 a share that Yahoo! had initially considered, indicating its intentions to avoid competition from other interested companies, such as America Online. The acquisition will give Yahoo! the programming power to fight rivals as they switch the pages on their networks from static text to services that incorporate audio and video. On the news, Yahoo closed up $11.375, or 6.8%, at $179.75/share, while Broadcast.com was up $11.8125, or 9.9%, at $130/share.

Discussion: Yahoo! is one of the few remaining independent Internet companies in operation after a recent round of industry consolidation. Instead of making frequent acquisitions like many other companies, it has chosen to build many of its services under its brand name. Company executives have recently announced that they are now intent on completing a series of moves that will solidify the company's leadership status, while also filling in the services it doesn't already have. The company recently acquired GeoCities Inc.

Broadcast.com has exclusive contracts for sports broadcasts and a fast-growing operation that serves corporations. It currently derives two-thirds of its revenue from business services, such as hosting a video conference over the Internet.