For Yahoo!, Local News Might Be Worth $300 Million

A deal for News Distribution Network could substantially boost Yahoo!’s local news and advertising opportunity.

Apr 4, 2014 at 9:35PM

Video could soon play a bigger part on Yahoo!'s (NASDAQ:YHOO) local news and event coverage, Fool contributor Tim Beyers says in the following video.

According to The Wall Street Journal, Yahoo! is in preliminary talks to acquire News Distribution Network, or NDN, for $300 million. Talk of the deal comes amid efforts to expand several area of the business with new e-zines for tech and other verticals, plus video deals that include the exclusive online broadcast rights for SNL clips, and a new interview show with Katie Couric as host.

Yahoo! chief Marissa Mayer has also been on a shopping spree, acquiring companies and technology that aid in developing and presenting content in a compelling manner. The thinking? Better content should draw in better traffic that can be monetized through contextual advertising. It's a strategy that should feel familiar to anyone who's visited Google's sites.

NDN would bolster Yahoo!'s local efforts. The network, founded in 2007 by a former AT&T executive, acts sort of like a more professional version of YouTube for aggregating and distribution local news clips from around the country for rebroadcasting via national outlets.

According to the Journal, NDN has some 100,000 videos in inventory that it monetizes with ads, and then shares the revenue -- again, like YouTube, even if the site operates at a much smaller scale. NDN served 573 million video views in January vs. more than 12.8 billion for Google sites, the Journal reports, citing comScore data.

The point remains that Mayer's strategy requires building a series of content pillars, and thus far, Yahoo!'s local efforts are underserved. NDN could change that, Tim says. Do you agree? Please leave a comment below to let us know what you think, and whether you would buy, sell, or short Yahoo! stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google (A shares) and Google (C shares) at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Google (A shares), Google (C shares), and Yahoo!. The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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