Report: Yahoo board OKs deal to buy Tumblr for $1.1 billion
By Juan Carlos Perez and Zach Miners
Yahoo’s board of directors has approved spending US$1.1 billion in cash to buy popular blogging site Tumblr, according to The Wall Street Journal.
The plan is for Tumblr to operate as an independent business, the Journalreported on Sunday, quoting anonymous sources.
Asked via email about the Journal’s report, a Yahoo spokesperson declined to comment. Tumblr didn’t immediately respond to a request for comment.
Ads threaten Tumblr users
Tumblr has a solid base of devoted users who are passionate about its creative and community-building power and their fear of the effects of commercialization under Yahoo is palpable, according to Andrew Frank, a Gartner analyst.
“They fear loss of control over the interface, over privacy, and over the freedom of expression in general,” Frank said via email.
Thus, for the acquisition to be successful, Yahoo must strike a balance between keeping Tumblr users engaged and delivering a positive return to Yahoo shareholders through advertising. “It will be a daunting challenge which will shed light on the future of both Yahoo and creative social self-expression,” Frank said.
Zachary Reiss-Davis, a Forrester Research analyst, also said that a big challenge for Yahoo will be to determine how to boost the revenue of Tumblr, which is currently very light on ads, without ruining the experience for users.
“For this to make sense for Yahoo, it has to keep Tumblr’s current active user base passionately engaged and spending time on the site, while also finding a way to add advertising,” Reiss-Davis said. “This will be a hard balancing act for Yahoo, given its mediocre record in the past regarding acquisitions.”