Yahoo!’s movie ticket

Internet giant's $5.7 bil deal opens pic portal

Internet powerhouse Yahoo! has struck a deal to acquire ‘Netcaster for a reported $5.7 billion in stock, positioning the Web portal as the leading distributor of audio and video, including movies, on the Internet.

The move into entertainment by a major Internet player has significant ramifications. As ‘Net broadcasting becomes more popular with consumers, independent producers will have entirely new sources for film financing and distribution.

The two online companies are expected to announce the merger today. Both companies’ boards met Wednesday to approve the deal.

As expected, (Daily Variety, March 23), Santa Clara-based Yahoo! will offer $130 a share for the 44 million outstanding shares of Dallas-based, according to sources.

Both Yahoo! and declined to comment on the deal.

Investors, however, embraced the news Wednesday, as shares of shot up $4.81 to close at $118.19. Company reached a 52-week high of $144.75 in January before splitting its stock. Yahoo! dropped $3.94 to end at $168.38.

Shares of jumped nearly $32 on March 22 after investors first learned that Yahoo! was interested in acquiring the online broadcaster.

Although distribution of films through the Internet may be years down the line, Yahoo! can expect immediate benefits from the purchase. It has been trying to broaden its mostly text-based service through acquisitions such as, which delivers audio and video programming ranging from presidential speeches and live sports events to Victoria’s Secret lingerie fashion shows on the Internet. offers access to more than 425 radio and TV stations and cable nets through its Web site.

In a move that adds films to its list of programming, inked a deal with Trimark Holdings in February to begin screening at least 50 pics from Trimark’s library, including its “Warlock” and “Leprechaun” series, for free or pay-per-view.

Company is interested in pursuing other deals with film distributors, as well as possibly financing film productions.

About 8.9 million Web users visited in February, according to Internet researcher Media Metrix. By comparison, 31 million — or 50% of all U.S. Internet users in February — used Yahoo!, the second-most popular site (after America Online) on the Internet, Media Metrix said.

Acquisition is expected to give Yahoo! an edge over rival Web portals, including Barry Diller’s Lycos (the second most popular search service, with 29 million visitors in February), Disney-owned Go Network and NBC’s service.

Yahoo! still operates independently without a media partner.

The Yahoo! deal, with its financial backing, leads some observers to speculate that the onset of movie broadcasting on the Internet may be closer than many analysts think.

But the technology of video delivery methods must improve and be adopted by more consumers. High-speed broadband services such as faster cable modems and DSL phone lines, for example, though not in wide use now, can provide near TV-quality video.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Digital News from Variety