Internet.com’s Internet Stock Index climbed higher Thursdayon Yahoo’s $5.7 billion bid for Broadcast.com, sending shares of both Internet media firms up 6% to 10% respectively.
The deal was discounted into both stocks to some extent since YHOO at more than $30 billion market cap was (and is) expected to lead the Internet charge in media. BCST ran 55% last month as the buzz about a possible bidder emerging made the rounds.
Two weeks ago I put a value on BCST at $4.7 billion–Yahoo was willing to go to $5.7 billion. It still paid for the new users at half the valuation Wall Street places on Yahoo users, meaning there could be a “value-trage” opportunity of Yahoo can convert.
The equation is 1+1+1=10 (up from 1+1=3), as Yahoo acquires GeoCities and Broadcast.com.
In the digital space mergers combine elements in more ways than one, hence how 10 can come from 3. depth and breadth draw out opportunities and I believe Yahoo now looks positioned as possibly the winner in the Internet media space. One more deal would help, or alliances. What area? broadband distribution. Yahoo should consider acquiring Time Warner’s Road Runner service in my opinion.