Coverage: UK tabloid Daily Mail owner considers Yahoo bid

The list of companies considering a bid for Yahoo’s core business just got longer with the Daily Mail & General Trust PLC, which owns popular British tabloid the Daily Mail, in talks with private equity firms to finance its own offer.

The Daily Mail joins a list of about 40 other companies considering such an offer, according to The Wall Street Journal.

CNBC had details on the day’s news:

The parent company of the Daily Mail is in talks with private equity firms for a possible bid for Yahoo.

“Given the success of DailyMail.com and Elite Daily we have been in discussions with a number of parties who are potential bidders,” a DailyMail.com spokesman told CNBC Monday. “Discussions are at a very early stage and there is no certainty that any transaction will take place. We have no further comment at this time. Further updates will be provided as appropriate.”

Yahoo declined to comment when contacted by CNBC.

The early talks between Daily Mail and Yahoo were initially reported by The Wall Street Journal.

The Journal reported that the Daily Mail & General Trust — the parent company of the Daily Mail, which runs a daily newspaper plus one of the world’s biggest tabloid-style news sites – was one of about 40 companies to have expressed interest in Yahoo. The Daily Mail has not yet met with Yahoo executives, the WSJ said.

Lukas I. Alpert and Douglas MacMillan of The Wall Street Journal, who originally broke the news, explained how the deal could take shape:

Daily Mail & General Trust PLC, whose main interest is Yahoo’s news and media properties, is just one of some 40 players that have expressed interest in the Web portal.

Yahoo has held meetings with Verizon, IAC/InterActiveCorp and CBS Corp., a person familiar with the situation said. The Mail hasn’t yet met with Yahoo executives. Verizon, which owns AOL and is looking to beef up its digital media and advertising businesses further, is considered a front-runner for Yahoo, according to many executives and analysts following the sale process.

A possible bid by Daily Mail could take one of two forms, people familiar with the matter said. In one scenario, a private-equity partner would aim to acquire the entirety of Yahoo’s U.S. operation, with the Mail taking over the news and media properties.

Those assets include verticals such as Yahoo Finance and Yahoo Sports plus Yahoo News and a video operation whose big star is Katie Couric. Yahoo has been retrenching in those businesses—in February the company closed seven digital magazines including sites dedicated to food, parenting and health.

In the other scenario, the private-equity firm would acquire Yahoo and merge its media and news properties into a new company that would include the Mail’s Web properties, DailyMail.com and Elite Daily, the people said. The Mail would run that business and would get a larger equity stake than under the first scenario.

The Mail has been in talks with half a dozen private-equity firms to help finance a bid, including General Atlantic LLC, one of the people familiar with the matter said. A General Atlantic spokeswoman declined to commen

BBC News featured analysis about how beneficial the Daily Mail’s offer could be:

It’s one of the best known brands on the internet, a billion people use it each month and it is home to much-loved web properties such as Flickr and Tumblr. But Yahoo is also a byword for decline, a Silicon Valley giant that has been stumbling and struggling for years. It’s the very opposite of a hot tech business – so why on earth would the Daily Mail be interested?

One obvious point is that if the price is right, any property can be attractive. After all, another ailing web giant, AOL, worth over $200bn in the late 1990s, was sold last year to the telecoms giant Verizon for just $4.4bn. And the Mail is going about this cautiously, talking to private equity firms which might be interested in Yahoo rather than going it alone.

While the Mail Online website has been phenomenally successful in building a global audience, digital advertising revenues have not risen fast enough to offset the decline in circulation and print advertising. Acquiring Yahoo’s huge, if declining, audience could help it to accelerate its transformation into a profitable digital news business.

Mail Online saw its US ad revenues soar 38% last year – but at £18m they still look puny compared with Yahoo’s. But there’s a salutary lesson in Yahoo’s own recent history. Its purchase of the blogging site Tumblr has so far failed to deliver the advertising revenues it hoped for from a sparky younger audience.

Buying a new business is one thing, getting its staff to share your vision and values quite another.