BIG DEAL: Yahoo Tumblr Buyout Confirmed For US$1.1 Billion!

Yahoo to be hip again

Qz reports, Yahoo CEO Marissa Mayer has made her first major move to try to make Yahoo cool again. The Wall Street Journal reports that Yahoo’s board today approved a $1.1 billion deal to acquire blogging site Tumblr. The deal, first reported by AllThingsD, is meant to attract younger users who see Yahoo as largely irrelevant.

Big Payout for Karp, Still Retains Control

AllthingsD states, As part of the Yahoo deal, Tumblr CEO David Karp — who will get a windfall of cash from the acquisition — will stay at Yahoo for four years at least and retain a lot of control over the service, much in the same way Instagram CEO Kevin Systrom does at Facebook. But, as there, Yahoo will undergird Tumblr’s nascent advertising business with its large and established infrastructure, said sources.

Big Risk, But Possibly Big Reward

WSJ reports, There are several risks for Yahoo. A popular venue for teens, Tumblr includes many Web pages of racially insensitive, pornographic and other sexually oriented content. Such pages wouldn’t be attractive to advertisers. There is also the risk of diminishing Tumblr’s appeal among some users with too-aggressive a push to bring in advertising revenue. Writing on his Tumblr blog Saturday, John Saroff, a former Google executive, estimated Tumblr could generate $108 million or more a year based on the rates advertisers generally are willing to pay for graphical ads online.

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