Facebook to Sell to Yahoo!?

Potentially says today’s WSJ (sub req’d):

People familiar with the matter say the company has held separate acquisition talks with Yahoo Inc., Microsoft Corp. and Viacom Inc. over the past year. Now, say some of these people, the start-up is in serious discussions — again — to sell itself to Yahoo for an amount that could approach $1 billion.

Yahoo! needs a big boost right now and this could be a nice one. Facebook’s audience, though big and extremely frequent, is much smaller than MySpace’s. Yet Facebook is the number #2 social networking site in the US.

If the WSJ report is true, Yahoo! would be buying the brand and the extremely valuable audience rather than the platform, which Yahoo! could presumably build on its own. Having said that, 360 Yahoo!’s profile/blogging platform is quite weak by comparison to others.

For Facebook, again if all this is true, it may reflect a recognition of the challenges of competing over the long term and a kind of uncertainty regarding the company’s roadmap. Then again, it’s hard to pass up that kind of money (especially for VCs).

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Related: John Battelle points out something I didn’t think about: the Facebook-Microsoft deal. Presumably that’s signed and sealed and would have to be honored if Yahoo! does acquire Facebook. We’ll see. Om Malik argues the Yahoo! acquisition is highly unlikely.

Also, Michael Arrington discusses some informed rumors of a potential YouTube $1.5 billion sale. Whether or not this particular rumor is true, YouTube will absolutely sell for north of $1 billion to a media company.

TimeWarner CEO Richard Parsons says these valuations are way too high.


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