Yahoo Closes Its $1.1 Billion Acquisition of Tumblr

By Chris Preimesberger  |  Posted 2013-06-20

Internet search and Web services pioneer Yahoo officially became a lot more relevant to Millennials and younger generations June 20 when it closed its $1.1 billion deal to acquire Tumblr.

In Marissa Mayer's first major move as CEO, Sunnyvale, Calif.-based Yahoo had announced on May 20 the purchase of the New York-based blogging platform that provides an Internet home for about 108 million blogs.

Tumblr is a popular hub of user-generated content because users can simply sign up and start using it in minutes for free. Users must be signed up to view other Tumblr blogs. It has attracted a generally young user base that employs the platform to post pictures and text on numerous topics, mostly involving music, art and culture.

Tumblr Profitability Not Exemplary

The deal provides Yahoo with a highly trafficked—yet financially so-so—social media platform to reach new users. Tumblr sites don't include display advertising. However, as the first big acquisition move for Mayer's regime, it is clearly part of an overall strategy to bolster Yahoo's position in the young-professional consumer market.

Many of those blogs are, in fact, sites that serve up pornographic photos and videos, something that Yahoo may find problematic as time goes on.

"As promised, Tumblr will continue to operate as a separate business, led by David Karp as CEO," Mayer wrote in a blog post.  "Their product road map, their team, and tone will all remain the same as will their mission to empower creators and curators alike to do what they love best: create.

"David and his team are redefining creative expression online, and we can’t wait to see what they come up with next."

Bringing Tumblr into the Yahoo domain will boost the parent company's audience by a whopping 50 percent to more than 1 billion monthly visitors, Mayer said.

Tumblr will add about 300 million monthly users to Yahoo's current 700 million. The new numbers "will draw in more advertisers and help us keep visitors for longer periods of time," Mayer told Reuters.

Tumblr to Remain 'Independent Business'

Yahoo said in its May 20 media statement that "per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business."

"Tumblr has a great thing going," Mayer said on a conference call with analysts and journalists at the time of the original announcement. "In terms of users and traffic, it is an immediate growth story for us.

"We will operate Tumblr independently. The product road map, their team, their wit and irreverence will all remain the same as will their mission to empower creators to make their best work and get it in front of the audience they deserve."


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