If you’d suggested in 1996 that the Daily Mail might one day buy Yahoo, you’d have been laughed out the building (with Paul Dacre's bootprint imprinted on your backside). Newspapers were on the way out, surely, while the internet was the future. Yet the rumours are apparently true. A spokesperson for the Daily Mail and General Trust (DMGT) confirmed to the Wall Street Journal that it was in ‘very early stage’ discussions with a private equity backer to buy the beleaguered tech giant. No doubt the Mail editor is already stocking up on the sun cream for a stint in Silicon Valley, to show the Americans how it’s done...
It’s a sorry turn of events for Yahoo, which has come under pressure from activist investors after suffering a $4.4bn (£3.1bn) loss last year, courtesy of a painful goodwill impairment (apparently the investors don’t have any for Yahoo, valuing the core business at $0 after its stakes in Yahoo Japan and Alibaba are factored out).
A key force in the early days of the internet, Yahoo is now like a smouldering cloud of space dust that never quite made it as a star, its critical mass sucked into the coalescing supergiants Google and Facebook. Like AOL - which bought Time Warner in 2000, only to be spun off itself nine years later for 2% of what it paid for the media titan – its time has passed.
The fact that the Daily Mail is looking to buy Yahoo is a clear sign that digital disruption isn’t a one-way street. DMGT has proven that a legacy business can itself become a disrupter if it puts sufficient thought and effort into it, and successfully leverages its brand and ‘expertise’. Love it, loathe it or be utterly addicted to it, the Mail Online is arguably one of Britain’s most successful internet businesses, a leader in English-language news with over 14 million daily users. Its revenues last year were £73m, up an impressive 18% on the year before.
What’s all the more impressive, from DMGT’s perspective at least, is that the Mail Online has grown so rapidly without cannibalising its print cousin (‘Mail Online "cannibal" denies eating cousin' – these headlines write themselves...). The two are distinct products, which has helped the Daily Mail newspaper to resist the decline of print notably better than its rivals.
Whether buying Yahoo would really add to that is debatable. The possible bids suggested in the WSJ are that DMGT buys Yahoo’s news operations (including Yahoo Sports and Finance) while a private equity backer buys the search business, or that the private equity company buys Yahoo outright then merges the news operations with Mail Online as a joint venture.
On the surface, this would give the Mail Online even more exposure than it already has in the US, its biggest market. Yahoo.com is the fifth most visited website in the world, so the Mail could just use it to harvest traffic from the billion or so users dropping by every month. But it would have to believe it can do more with it than Yahoo has been able to – the tech company has been scaling back on its editorial offering under CEO Melissa Mayer, after all.
Who knows, maybe it’s the opportunity the Mail has been waiting for to diversify out of celebrity scandal and horoscopes, into other forms of journalism? Stranger things have happened.