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Yahoo! eyes Broadcast.com
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March 22, 1999: 11:58 a.m. ET
Web portal reportedly wants to acquire provider of 'stream' broadcasts
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NEW YORK (CNNfn) - Yahoo! Inc. is exploring a possible merger with Broadcast.com., a provider of audio and video products through the Internet, according to a published report.
Business Week online reported Monday that Yahoo! is eyeing the three-year-old company, whose stock has surged recently. In late morning trading Monday, shares were up 22-1/32 at 107-1/32.
The reports of a possible alliance follow attempts by Yahoo! to quell talk that it would like to buy one of the big traditional media companies, such as CBS, said Miles Russ, Internet analyst at Wheat First Union in Richmond, Va.
"I think what Yahoo management clearly articulated is they are not interested in buying a traditional media company," Russ told CNNfn. Instead, "they want to acquire distribution vehicles that will facilitate their distribution across the Internet."
Business Week, citing a source close to the discussions, reported that top Yahoo officials including CEO Timothy A. Koogle have met with the management of Broadcast.com about a possible merger. "They've linked sites for a long time," a source told the magazine. "They have a very good working relationship."
Officials at both companies declined comment Monday, saying they don't respond to rumors.
Yahoo!, an Internet search engine whose services are primarily text-based, has been looking to broaden its reach on the Web as competition among portal providers intensifies. In January, Yahoo! announced it would buy GeoCities Inc. (GCTY) in a stock deal worth about $4.7 billion, including options. GeoCities is a popular site that allows users to set up their own Web pages and links people who share similar interests.
A marriage with Dallas-based Broadcast.com, analysts say, would be an appealing match for Yahoo!. The Texas company provides, or "streams" in Internet-speak, movies, music and other types of broadcasts to online users. It has a market capitalization of about $3.5 billion
Broadcast.com "would be a logical acquisition," for Yahoo!, Russ said. And from Broadcast.com's point of view, an alliance with a big search engine likely would give the company immediate brand-name credibility, he said.
A merger "would be a natural fit," agrees Bruce Smith, Internet analyst at Jefferies & Co. Inc. in New York.
"It brings to Yahoo! a whole new group of users," he told CNNfn. "If you believe that the Internet is a delivery mechanism for all kinds of new media content, it fits very well with the kind of broadbased network that Yahoo! is trying to assemble."
Yahoo!, based in Santa Clara, Calif., already owns a minority stake in Broadcast.com. A buyout offer probably would be an entirely stock transaction that Yahoo!, with a market capitalization of $35 billion, "could easily handle," Smith said. 
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