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Yahoo’s Billion-Dollar Blunder: Bought Tumblr Instead of Netflix

Yahoo's Billion-Dollar Blunder: Bought Tumblr Instead of Netflix

Hey folks, did you hear about Yahoo’s failed attempt to make a “transformative” acquisition? Yeah, their former CEO Marissa Mayer spilled the beans in a recent interview with Tech Brew. Apparently, they were eyeing Netflix and Hulu, but they ended up buying Tumblr for $1.1 billion. To put it mildly, things didn’t quite work out as planned.

Mayer said, “Either of those, with hindsight being 20/20, would have been a better acquisition.” No kidding, Mayer! Netflix’s market capitalization was $12.7 billion back in May 2013, and now it’s a whopping $143.5 billion. Oopsie!

Yahoo’s former CEO admits they made a billion-dollar blunder by buying Tumblr instead of Netflix, leaving them regretting their decision.

Yahoo tried to make up for their mistake by launching their own streaming-video play, but it was a flop. They even picked up Dan Harmon’s “Community” after it was cancelled by NBC, but it still didn’t help. By 2016, Yahoo Screen was shut down, and their original and syndicated programming was gone with the wind.

Meanwhile, Yahoo hoped that Tumblr would be their golden ticket to social media fame. But, guess what? They struggled to monetize Tumblr’s user base, and in 2015, they took a $230 million goodwill-impairment charge. Yikes!

Verizon ended up buying Yahoo in 2017 for $4.5 billion, and in 2019, they sold Tumblr to Automattic, the company that owns WordPress, for a mere $3 million. I guess Tumblr was worth more as a virtual scrapbook than a social media platform.

Back in 2013, Yahoo tried to buy Hulu, but the owners at the time, Disney, Comcast, and 21st Century Fox, decided to keep their ownership of the site. Today, Hulu is majority-owned by Disney, but its future is still uncertain. Bob Iger, Disney’s CEO, said they’re examining whether they’ll buy out Comcast’s 33% stake in Hulu or sell/spin off the streamer. Good luck with that, Iger!

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Yahoo’s failed acquisitions serve as a cautionary tale for companies looking to make transformative acquisitions. While Tumblr may have seemed like a good acquisition at the time, it ultimately failed to provide the returns Yahoo was looking for.

In contrast, Hulu and Netflix have gone on to become major players in the streaming-video space, underscoring the importance of making strategic acquisitions in the rapidly evolving digital media landscape.

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