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 The Berkshire Hathaway Inc chairman is backing a consortium that
includes Quicken Loans Inc founder Dan Gilbert, that is seeking to
buy Yahoo's online portfolio, Reuters reported on Friday.
The consortium is in the second round of bidding in the auction for
Yahoo's assets, people familiar with the matter said. Buffett is
helping to finance the offer, one of the people added.
If they succeed, the investment would be a relatively rare foray
into digital media for Buffett, whose portfolio is heavily weighted
toward U.S. insurers, industrial companies and major consumer
brands.
Yahoo, once the world's largest consumer email service, has
struggled in recent years to compete with Alphabet Inc’s Google and
Facebook Inc for digital advertising market share.
In February, CEO Marissa Mayer announced the company would auction
off its Internet business and cut 15 percent of its workforce. It is
also selling $1 billion to $3 billion in noncore assets such as
patents and property.
Poynter Institute media business analyst Rick Edmonds said Buffett's
history of betting on struggling companies that maintain a large
consumer base could work in Yahoo's favor.
In the case of Media General, Buffett bought a majority of the
company’s newspapers, making him one of the largest publishers in
the United States as the industry struggled with plummeting
advertising and subscription revenue.
Buffett also provided nearly $450 million in debt relief to Media
General, whose remaining business focused on dozens of local U.S.
television stations and related websites, in return for a stake of
nearly 20 percent in the company. The day the transaction was
announced, Media General's shares jumped 30 percent. The stock
closed Friday at $17.12, up from $3.32 in May 2012.
"It's kind of consistent with Buffett's pattern of buying things
that are out of favor, undervalued and have a big customer base,"
Edmonds said. The paradox is Yahoo's huge, it remains huge, and it's
got a lot of customers. It's not the case customers are fleeing them
right and left, it's just that no one can get a good pattern of
growth."
Pivotal Research Analyst Brian Wieser agreed the move would be a
familiar one for Buffett.
"He is known for having a lot of assets that have a lot of potential
that for a host of reasons have not realized that potential," he
said.
Former Yahoo president and chief financial officer Susan Decker is
now a director on Berkshire's board. Wieser said that Buffett, with
Decker’s input, might consider bringing back former Yahoo
executives, such as interim CEO Ross Levinsohn, who was a candidate
for the top job before Mayer was appointed.
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Decker said last month on CNBC that the next owner should "create a
distinction in consumers' minds about why they love Yahoo still."
She said that plan would be helped if Yahoo is "private or part of a
much larger corporation."
During a CNBC interview earlier this month Buffett said that Yahoo's
business has "continuously slipped" but did not mention a bid or a
specific turnaround strategy.
Buffett and Dan Gilbert have been close friends since 2012, when
Gilbert joined the Giving Pledge, an initiative created by Buffett
and Bill Gates to encourage billionaires to give away at least half
of their wealth during their lifetime or at death.
Berkshire Hathaway provided insurance on a $1 billion prize offered
by Quicken Loans to anyone who completed a perfect bracket in the
2014 National Collegiate Athletic Association men’s basketball
tournament. No one pulled off the feat.
"There could well be more business relationships in the future, but
beyond that it’s a friendship," Buffett said, referring to Gilbert,
in a telephone interview with Reuters on April 5.
Part of the consortium's interest may lie in Yahoo Finance. Gilbert
has shown strong interest in that unit, according to a source who
asked not to be identified.
Buffett has credited Yahoo with doing a "terrific" job during live
streaming of Berkshire's April 30 shareholders conference. At that
meeting he also admitted that Berkshire had been slow to adapt to
new technology as far as its investments were concerned.
(Additional reporting Dan Freed, Michael Flaherty and Greg
Romueliotis in New York and Liana Baker in San Francisco; Editing by
Michele Gershberg and Matthew Lewis)
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