- NEW YORK - Yahoo! Inc. Thursday said it would buy Broadcast.com Inc., the
No. 1 broadcaster of audio and video programs via the Web, in a deal valued
at $5.7 billion that reinforces Yahoo's position as one of the top Internet
media companies.
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- Terms of the deal call for Yahoo, the
most popular spot on the Web, to trade stock worth $130 per Broadcast.com
share in a pooling-of-interests transaction that Yahoo expects to close
in the third quarter of this year.
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- The merger reflects the continuing consolidation
of the Internet media sector in which a handful of companies are using
their skyrocketing stocks as high-priced currency to acquire technology
features and established audiences they lack.
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- Reacting to the news, Yahoo stock spiraled
higher Thursday morning, jumping $11.62 to $180 while Broadcast.com climbed
as high as $133, or $14.87 above Wednesday's closing price.
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- The deal marks a small premium from Wednesday's
closing price but a huge pay-off compared with Broadcast.com's mid-$80s
share price two weeks ago, when deal rumors first surfaced.
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- "We're really stoked about this,''
said Tim Koogle, the sleepy but enthusiastic chairman of Santa Clara, Calif.-based
Yahoo, in a conference call with Wall Street analysts that began in the
wee hours of the morning Thursday.
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- Koogle kicked off the conference call
by joking that the agreement was, "probably one of the worst kept
secrets in the industry'' " a reference to the widespread leaks ahead
of the formal announcement of the deal.
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- Yahoo said the company expects to record
an unspecified one-time charge in the third quarter for expenses related
to the acquisition of Dallas-based Broadcast.com.
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- The deal will draw Broadcast.com, which
beams everything from presidential speeches, to investor conference calls
to lingerie catwalk fashion shows, into Yahoo's growing network of media,
communications and electronic shopping properties.
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- Yahoo's Web site serves more than 50
million different visitors per month. In a statement, Yahoo said the acquisition
expands the multimedia content programming it can offer, enhancing its
site's appeal to viewers and to advertisers.
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- The acquisition positions Yahoo to take
advantage of the growing demand for audio and video broadcasting over the
Internet and the exponential growth in such programming that is expected
to occur as millions of computer users upgrade to high-speed Internet connections
in coming years.
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- The merger is the latest in a flurry
of deals that has created a smaller number of big players in the Internet
media sector. Recently, America Online Inc. (AOL.N) acquired Netscape,
Walt Disney Co. (DIS.N) allied with Infoseek (SEEK.O) and AtHome Corp.
(ATHM.O) agreed to buy Excite Inc. (XCIT.O)
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- The Broadcast.com deal comes on top of
Yahoo's proposed purchase of GeoCities Inc. (GCTY.O), a community of more
than 3.5 million personal home pages, in a deal worth nearly $4 billion.
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- The total value of the Broadcast.com
all-stock deal is $5.7 billion, based on the $168.37 closing price of Yahoo
stock Wednesday, before the transaction was announced.
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- Yahoo, wielding the power of its high-flying
Internet stock valuation, will exchange 28.33 million of its shares for
36.7 million shares of Broadcast.com.
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- The deal includes the conversion of about
7.1 million Broadcast.com options into around 5.5 million Yahoo options.
The figure includes $4.8 billion in Broadcast.com common stock and $900
million worth of Broadcast.com stock options.
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- Officials of both companies said the
deal was structured to allow for possible wide fluctuations in the share
prices of the two companies before the deal closes. The deal contains substantial
penalties if either company breaks up the deal.
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- Yahoo executives cautioned analysts that
the deal would dampen the company's earnings potential in the first year,
but begin to add to profits beginning in the third quarter of 2000. However,
the officials said it would have no long-term impact on its basic operating
profit goals.
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