Yahoo acquires video service for $160 mn

Washington, Feb 13: Having rejected Microsoft's hostile 44.6 billion dollar takeover bid, slumping Internet pioneer Yahoo Incorporated on Tuesday acquired the online video service Maven Networks Incorporated for 160 million dollars.

The deal marks Yahoo's latest attempt to expand its online advertising network and snap out of a two-year financial mess that has culminated in unsolicited takeover offer from Microsoft Corp. The Yahoo's board rejection of Microsoft on Monday has now raised the possibility of Microsoft taking its offer directly to Yahoo shareholders. Redmond, Washington State-based Microsoft so far has indicated it's not budging from its original offer, calling the proposal "full and fair."

Yahoo continues to work on a long-promised turnaround. The talks to buy the Cambridge, Massachusetts-based Maven began before Microsoft announced its bid, papers quoted Tim Cadogan, Yahoo's senior vice president of marketing products, as saying.

Maven helps television and movie studios find Web sites to show their videos and manage the accompanying advertisements. The six-year-old startup works with a wide range of media outlets, including CBS Sports, Gannett Co., News Corp., Hearst Corp. and Sony Pictures.

Online video advertising is steadily climbing as more people watch news and entertainment online. The amount spent on Internet video ads annually is expected to triple during the next three years to 4.3 billion dollars in 2001, estimated research firm eMarketer Inc.

Yahoo has been discussing a search advertising partnership with the market leader, Google Inc., as a way to boost its profits and thwart Microsoft's bid. But a deal between Google and Yahoo would face significant antitrust hurdles because it would meld the two largest search advertising networks, causing more analysts to conclude an alliance is unlikely.

As of December, Yahoo held a 3.4 percent share of the U.S. online video market, lagging far behind Google, whose ownership of industry leader YouTube.com gave it nearly one-third of the market, according to comScore Inc.

Yahoo plans to retain Maven's roughly 70 employees even as it completes plans to lay off 1,000 workers in other divisions as part of a plan announced two days before Microsoft's bid.

Based on a previous mid-February timeline established by management, Yahoo is expected to release additional details about the layoffs late this week or early next week.

ANI