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Yahoo No Longer Buying YouTube's Little Brother

Posted
5/1/2013 12:43:00 PM
By: Benzinga
Referenced Stocks:CMCSA;GOOG;NFLX;NWS;YHOO

While shopping for new content, Yahoo (NASDAQ: YHOO ) had hoped to take home a shiny-new streaming video site this year. There were rumors that the Internet giant would acquire Hulu from its current owners, Disney (NYSE: DIS ), Comcast (NASDAQ: CMCSA ) and News Corp. (NYSE: NWS ). Thus far, those three media giants have held onto the streaming video site, which was created by Fox and NBC.

Roughly six weeks ago Yahoo was reportedly in talks with France Telecom to acquire its YouTube clone, Dailymotion.

Dailymotion receives as many as 116 million unique monthly visitors and is said to be worth $300 million. If acquired, it would have been Yahoo's biggest acquisition since Marissa Mayer became the CEO.

After the first report surfaced, Benzinga compared the viewership of Google's (NASDAQ: GOOG ) YouTube and Dailymotion. In almost every case, YouTube dwarfed its French competitor.

For example, a clip entitled, "Guy picks nose on TNT and owns it," had received 4.6 million views at the time of the comparison (it is now up to 7.5 million views ).

That video was featured at the top of YouTube's homepage on March 20. On that same day, Dailymotion heavily promoted the "Top 10 Scariest Movie Aliens," which only received 439 views. It is now up to more than 4,700 views .

Nonetheless, Yahoo seemed to be very interested in Dailymotion's acquisition, likely because of its success outside the United States. Yahoo may have also believed that it could build the site into a formidable YouTube competitor.

Yahoo will never get to fulfill that dream, however, now that Arnaud Montebourg, France's Industry Minister, has gotten involved.

According to The Wall Street Journal , Montebourg told Dailymotion execs that it did not want the company to sell one of France's best startups to an American company. He could accept a 50-50 partnership, but he did not want Yahoo to gain a controlling stake in Dailymotion.

This apparently turned off Yahoo, which has now lost interest in the potential investment.

It is not yet known which site Yahoo may replace Dailymotion with, though it is unlikely that the company will give up its search for a streaming video stalwart.

Netflix (NASDAQ: NFLX ), the world's largest streaming video subscription service, has a market cap of nearly $12 billion. This would make it far too costly for Yahoo to consider.

Hulu, which was valued at $2 billion in April 2012, would be considerably cheaper. That price is several times more expensive than Dailymotion, however, and would not provide Yahoo with a hub for homemade content.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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