Seven West Media has sold its 50% stake in Yahoo7 to Oath Inc, its US joint venture partner, after spending the last two years building its own digital news and content business and apps.
Two years after reaching what’s called a put option arrangement with Oath which allowed Seven to sell its 50% stake back to the US company, Seven believes its digital offerings, especially in streaming video content are now sufficient to go it alone and grow its audience of around 3 million a month.
Seven West’s shares dipped 1.8% to 54 cents yesterday, then rose 0.9% to 55.5 cents. It was not a surprise announcement.
Oath is the subsidiary of giant US telco Verizon which owns Yahoo and AOL- Oath houses the collection of digital brands Verizon owns.
Oath owns a group media and technology brands that in Australia and NZ includes HuffPost and ONE by AOL. Global Oath brands include Yahoo, AOL, MAKERS, Engadget, TechCrunch, Tumblr, Flurry and the Build Series. Seven’s decision to fly alone and was revealed in a statement to the ASX yesterday that it revealed had exercised that put option and required Oath to buy the remaining half of the Yahoo7 business.
Seven did not disclose the monetary value of the put option (it will when the deal settles in August, in the new financial year). But the 50% of Yahoo7 hasn’t been the best of investments for Seven West.
In February of last year (2017), Seven wrote down the value of the joint venture by $75.5 million after pressure from ASIC, the corporate regulator. That left the venture valued at $129 million in Seven West Media’s balance sheet.
There were a round of job cuts at Yahoo7 announced earlier this year, with some redundant staff being redeployed at other parts of Seven.
Yahoo7 was founded in 2006. Yahoo7 creates websites including the Yahoo7 homepage, 7News, 7Sport, Yahoo Finance, as well as lifestyle and entertainment destination Be, and connects people through Yahoo7 Mail.
In a statement, Seven West said that two years ago it “began the process of taking control of its direct to consumer digital products where it made financial sense to do so. The first of these were premium sports products, including 7Tennis, in January 2016. Then came Pacific’s digital content in March that year, followed by West Australian Newspapers’ in December 2016. At the end of last year, Seven took control of its long-form video on demand content and launched its over-the-top (OTT) digital video platform 7plus to great success.”
“SWM is now focused on strategic development of Seven’s market-leading News and Public Affairs brands, which represent around three million of Yahoo7’s unique monthly audience of eight million,” Seven said in this morning’s announcement.
