Yahoo Quietly Acquired Germany’s Media Group One For $23M In Q1

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Yahoo’s well-worn acquisition trail to bring tech and talent back into the Internet company has been one of the more notable hallmarks of life under CEO Marissa Mayer. And while M&A appears to have slowed down significantly in 2015, it’s not stopped altogether: Yahoo quietly made an acquisition in Europe earlier this year to build out its advertising business in the region, and we have now found out that it was a $23 million deal.

In December 2014, Yahoo announced it would acquire a company based in Munich called Media Group One.

You can think of Media Group One is one part Federated Media, and one part YouTube-style network — in itself interesting in light of Yahoo’s long-ago, thwarted ambition to buy DailyMotion.

MGO sells and syndicates ads into some 800 partner sites, in part by organizing content from them into three German language “mega verticals” — ENTANIA, FABALISTA, and ZOLANIS. The other division operates a video network called SnackTV, which aggregates content from various publishers and offers a way to syndicate that automatically on other sites.

Figuring out Yahoo’s acquisition took a little sleuthing. The deal was actually made public in December, but it was little noticed by the English-language press (including us) — possibly because the news was posted on Yahoo Germany’s press site rather than its main US site.

Then, when the deal officially closed in January, there was no mention of the price paid.

But a 10-Q form filed in May of this year featured a small note saying that Yahoo had made a $23 million acquisition in Q1. The 10-Q also noted $20 million in goodwill related specifically to an EMEA acquisition.

Putting two and two together, we asked and Yahoo confirmed what had happened. “Media Group One is the acquisition that closed in Q1,” a spokesperson said, referencing the press release from Media Group One itself.

According to that announcement, the deal will be used as a way to expand the Yahoo Gemini marketplace for mobile and native advertising, by combining it with the reach of Media Group One’s publisher network its SnackTV video portal.

“Yahoo’s and Media Group One’s competencies complement each other exceedingly well,“ noted Aric Austin, who had been MD of the German company pre-Yahoo and is now VP of sales and publisher management at Yahoo. “A particular highlight is our video syndication product known as SnackTV, which offers a perfect enhancement to Yahoo’s focus on video. We’re looking forward to working together with the Yahoo team and are particularly excited about all of the new opportunities for both organizations, our business partners and the MEDIA GROUP ONE publishers.“

The full management team, pictured below with Yahoo’s EMEA SVP Dawn Airey, have joined Yahoo and are pictured below.

Screen Shot 2015-07-24 at 16.28.54

Yahoo and Europe

Yahoo’s move to expand its business in Europe by way of Media Group One comes at a key moment for the company’s international — and specifically European — business.

Media Group One fills a couple of important gaps for the company: it expands Yahoo’s reach in Europe, specifically Germany, and it is doing so especially around the kind of web content where Yahoo has wanted to get more active: premium video content.

And it’s coming not a moment too soon: Yahoo has been flagging in the Old World. While Yahoo under Mayer has been investing a lot to improve business in its primary market — the Americas and specifically the U.S. — the international operation, which is far smaller, has seen recent declines both in revenues and presence.

According to the company’s Q2 earnings statement, published earlier this week, GAAP revenues in EMEA ex-traffic acquisition costs was $72.9 million compared to $87.6 million for the same quarter a year ago. The six-month figures showed a decline of nearly $30 million to $142 million. As a point of comparison, the same revenue ex-TAC figures for the Americas grew to $811 million in the quarter, and $1.6 billion in the half-year period.

At the beginning of June, Yahoo’s latest spring cleaning report also noted that a number of international properties would be getting shut down to “streamline our editorial offering,” with the content redistributed across other parts of the Yahoo network.

European closures included Yahoo Music in France, Yahoo Movies in Spain, Yahoo TV in the UK, France, Germany, Spain and Italy and Yahoo Autos in the UK, France, Germany, Spain and Italy.

An interview with Airey published earlier this year highlighted some of the challenges that the company had been having with its advertising business prior to her arrival in 2013.

The company had shifted from a model in the UK of liaising with agencies to liaising with clients and verticals, and “it was a mess,” she told Campaign magazine.

At the same time, she has had to address the impact of the wider, global consumer shift away from desktop PCs and basic web sites, and toward mobile and more dynamic content like video.

“I want to – I need to – step-change our revenue and I’d like to reach double-digit growth,” she told Campaing. “But PCs are in the descendancy – good old-fashioned display ads are not as profitable as they were. So our MaVeNs [Yahoo’s mobile-video-native ad mix] are important. They are not quite yet offsetting the falls elsewhere, but we’re working towards this year being a turning point.”

For all of these reason, Media Group One seems to make a lot of sense for Yahoo, which mainly focused it M&A march on the U.S..

The Media Group One business is not an insignificant operation. The company says that the combined operation makes it one of the 10 largest marketing and ad agencies in Germany. Its content “mega verticals” see over 18 million unique visitors monthly.

The SnackTV content consists of 330,000 pieces of content from some 200 publishers that include TV stations, production companies and those who develop content specifically for the Internet.

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