By Yoree Koh And Douglas MacMillan
Several Internet giants have inquired about buying Flipboard
Inc., maker of a newsreader app that has recently signaled it is
open to acquisition discussions, according to people familiar with
the matter.
In recent weeks, Google Inc. and Yahoo Inc. have both reached
out and held early discussions with Flipboard, three of the people
said. Those talks have involved ideas around how products could be
integrated, but they haven't evolved to a price, the people
said.
Talks with Twitter Inc. went further, discussing a deal price of
about $1 billion, these people said. But those negotiations, which
began months ago, have largely stalled since April. Technology news
site Recode earlier reported news of the Twitter talks.
Flipboard aggregates stories from various publishers as well as
users' social networking circles, enabling users to curate their
own news-reading experience into a digital magazine. The startup,
founded in late 2010, said it had 65 million monthly active users
in May, up from 50 million in February.
The talks with Flipboard highlight the push by these Internet
companies to make it easier for users on-the-go to consume content.
Rivals such as Facebook Inc. and Snapchat have recently forged
partnerships with publishers to show more content within their
apps.
That trend may be a driving force behind Twitter's interest in
buying Flipboard earlier this year. The discussions were championed
by Twitter financial chief Anthony Noto, the former Goldman Sachs
Group Inc. banker who led that firm's investment in Flipboard when
the startup raised $50 million in 2013. At the time, Goldman and
other venture-capital investors valued Flipboard at $800
million.
Mr. Noto has been particularly eager to bring Flipboard into the
Twitter fold. He urged some people at Twitter as far back as early
2014--before he joined the social media company--that Twitter
should buy Flipboard because the app's interface could provide a
better experience for people who use Twitter to primarily consume
news, according to a person familiar with his thinking.
Twitter's real-time nature has made the service a force in
breaking and spreading news, but the deluge of streaming tweets has
also made it difficult for users to parse the headlines. In recent
years Twitter has sought to make its mobile app more visually
appealing while working with media organizations to share its
content on the site. But its efforts to cater to news organizations
haven't kept pace with overtures by rivals.
Facebook, for example, earlier this month launched an initiative
dubbed Instant Articles, in which nine media organizations can
publish content directly onto its iPhone App. Facebook has said
this allows users to access articles about 10 times faster than
they can now, and the publishers can place ads and receive 100% of
the revenue.
Flipboard and Twitter have been partners in several respects.
Most recently, Twitter in February said it would begin selling
advertising on the Flipboard app, giving advertisers the chance to
reach a broader audience away from Twitter.
Acquisition talks between the two parties started early this
year but have cooled since Twitter's disappointing first-quarter
earnings report in April, according to one person involved in the
talks. Another person familiar with the matter said the talks have
reached a standstill.
Google and Yahoo have both tried to compete with Flipboard by
launching their own newsreader apps, and both failed to gain
traction. Yahoo's Livestand app, which it closed in 2012, preceded
the company's chief executive, Marissa Mayer, who showed an
interest in acquiring large social-networking services when her
company paid $1.1 billion to acquire Tumblr in 2013. Flipboard
might fit into Ms. Mayer's strategy to spiff up its news and
content sites with new designs called "digital magazines, "
including Yahoo Tech and Yahoo Style.
Part of Flipboard's appeal also stems from the experience of its
team. Mike McCue, the company's chief executive, previously built
voice recognition startup TellMe Networks and sold it to Microsoft
Corp.; his co-founder Evan Doll was formerly a senior software
engineer at Apple.
Mr. McCue has close ties to Twitter, having served on the
company's board until 2012. He stepped down from the role as
tensions rose between Twitter and the third-party app developers
with whom it increasingly competed.
Flipboard has raised $160 million from investors including
Goldman Sachs, Rizvi Traverse Management, Insight Venture Partners
and Kleiner Perkins Caufield & Byers.
Write to Yoree Koh at yoree.koh@wsj.com and Douglas MacMillan at
douglas.macmillan@wsj.com
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