×
You will be redirected back to your article in seconds

Yahoo Says It May Write Down All of Tumblr’s Remaining Value

Yahoo CEO Marissa Mayer’s $1.1 billion deal for Tumblr may end up being a bigger bust than most people thought.

The Internet company disclosed in an SEC filing that it is “reasonably possible” that it could write down all of the remaining value of blogging site Tumblr, which it acquired in 2013.

That would come after Yahoo took a $230 million goodwill-impairment charge for Tumblr for the fourth quarter of 2015. On the company’s balance sheet, Tumblr represented $519 million of its remaining $808 million goodwill balance as of Dec. 31, 2015.

“Given the partial impairment recorded in our Tumblr reporting unit in 2015, it is reasonably possible that changes in judgments, assumptions and estimates we made in assessing the fair value of goodwill could cause us to consider some portion or all of the remaining goodwill of the Tumblr reporting unit to become impaired,” Yahoo said in a 10-K filing Monday.

The disclosure comes with Yahoo’s future in flux. The company is in the process of engaging with prospective buyers, reported to include Comcast, AT&T, Verizon and Time Inc., as it cuts back operations along with a 15% reduction in workforce.

Yahoo has struggled to turn Tumblr, which has around 550 million monthly users, into a strong revenue-generating business. The goal was to bring a much-needed social network to Yahoo, whose core business of display advertising and search continues to deteriorate. Tumblr has launched advertising units and added video, to compete with services like Facebook’s Instagram, but Yahoo said the unit could face future declines.

Drops in Tumblr’s market share “could negatively impact the estimated future cash flows and discount rates used in the income approach to determine the fair value of the reporting unit,” Yahoo said in the filing, which “could result in an impairment charge in the foreseeable future.”

New York-based Tumblr, founded in 2007, had raised $125 million from investors including the Chernin Group, Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners, CrunchFund and DFJ Growth.

Yahoo’s board and Mayer face a looming proxy fight, led by activist investor Starboard Value. Starboard has previously said it plans to nominate a slate of new directors prior to the March 26 proxy-filing deadline.

Popular on Variety

More Digital

  • Neilsons Measurment Problems TV Digital

    AT&T's Ad-Tech Unit Xandr Buys Clypd To Help Place TV Commercials More Precisely

    Xandr, the AT&T ad-technology unit, has purchased a new company that helps advertisers use data to place commercials in front of the audiences most likely to want to watch them The AT&T division said Friday it had acquired clypd, a company that helps advertisers move forward in a growing desire by Madison Avenue to run [...]

  • AT&T Logo Building

    AT&T TV Now Price Hike Coming Next Month, Base Package to Cost $65

    AT&T is instituting a substantial price hike for its live TV streaming service AT&T TV Now: Customers who have subscribed to the service’s basic “Plus” package will see their bill go up by $15, to a total of $65 per month, starting next month. The telco has started to inform existing subscribers about the price [...]

  • Disney-Family-Movies

    Disney Family Movies SVOD Service Is Shutting Down Ahead of Disney Plus Debut

    After 11 years, Disney is pulling the plug on Disney Family Movies On Demand — with the service’s shutdown coming just days before the launch of the Mouse House’s Disney Plus. Disney Family Movies, which cost between $5-$10 per month, has been available via pay-TV providers in the U.S., including Comcast Xfinity, Charter Communications, Verizon [...]

  • Amazon Orders ‘All or Nothing: Tottenham

    Amazon Orders ‘All or Nothing: Tottenham Hotspur’ Soccer Doc Series

    Amazon has greenlit a new “All or Nothing” sports documentary series, this time following London-based soccer team Tottenham Hotspur. “All or Nothing: Tottenham Hotspur” will follow a year in the life of the team, charting the ongoing 2019-20 season. The squad made it to the final of the European Champions League last year, losing to [...]

  • Jeffrey Katzenberg

    Jeffrey Katzenberg's Quibi Picks T-Mobile as Wireless Launch Partner

    Quibi, the short-form mobile TV service founded by Jeffrey Katzenberg, announced a pact with T-Mobile to be the official telecommunications partner for its April 2020 launch. T-Mobile will be the exclusive wireless distributor when Quibi launches next spring. However, the arrangement doesn’t mean only T-Mobile customers will be able to subscribe to Quibi: Anyone will [...]

  • Steve Kornacki

    Steve Kornacki, Chris Matthews Stand at Center of New NBC News Podcasts

    After vowing to press ahead more directly into the world of podcasts, NBC News is readying the launch of three additional audio shows centered around politics. “Article II: Inside Impeachment” will help listeners understand the impeachment process. The program, new episodes of which are slated to debut Mondays, Wednesdays and Fridays as people head for [...]

More From Our Brands

Access exclusive content