Yahoo’s Marissa Mayer, Hulu And The Art Of CEO Deal Doublespeak

Yahoo has entered the bidding for online video site Hulu. But Yahoo CEO Marissa Mayer seemed to suggest the company was done with big deals for this year after the Tumblr purchase. Or did she?

Just five days after announcing a $1.1 billion deal to buy Tumblr, reports emerged Friday afternoon that Yahoo had submitted a bid to buy online video site Hulu.

Hulu’s owners — News Corp, Disney, and Comcast — have been debating for months if not years about the widely popular website’s future. Scenarios have included taking Hulu public (which didn’t happen), having one of the owners buy out the others (which appears unlikely), or selling. The latter option appears to be the most likely outcome provided the owners can get the price they want, estimated to be between $1 billion and $2 billion, and the potential buyers can get long-term digital rights deals from the owners for their content. After all, Hulu isn’t worth much without access to programming from News Corp’s Fox, Disney’s ABC, and Comcast’s NBC to stream. CBS has a deal with Hulu, but not for current first-run shows on its network; rather its deal is for older library content that is available on the service’s paid subscription tier.

Other companies reportedly bidding for Hulu include: Time Warner Cable, DirecTV, former News Corp president Peter Chernin, private equity firm Guggenheim Partners, where former Yahoo interim CEO Ross Levinsohn now resides, and talent agency William Morris Endeavor in partnership with SilverLake Partners.

The fact that Yahoo has joined the fray may come as a surprise to some observers given the comments CEO Marissa Mayer made last week in the wake of the Tumblr deal. In interviews with both CNBC and Bloomberg, Mayer appeared to suggest that she was finished with big acquisitions for the year.

In an interview with CNBC’s Carl Quintanilla, Mayer said of future dealmaking: “I’m not sure there’s another one on the immediate horizon. I don’t ever like to say never, but I think it takes a moment to breathe.” (see tweet from CNBC producer below.)

Mayer also used the “never say never” line with Bloomberg, while also calling the Tumblr deal “an exceptional acquisition.” (see tweet from Bloomberg tech reporter below.)

So, what’s going on here? Is Mayer talking out of both sides of her mouth by saying that she sees no immediate deals for Yahoo on the horizon and then turning around and bidding for Hulu?

Well, not really. While it may seem that way on the surface, what Mayer is really doing is engaging in the fine art of CEO deal doublespeak.

Mayer’s comments are designed to reassure investors that Yahoo will be methodical and thoughtful about how it spends its money. In effect, she is saying the company doesn’t plan to do deals just to do deals. They will be thoughtful about what companies they buy, making sure they fit with Yahoo’s overall mission and strategic plan. Such reassurance gives investors confidence to stick with the stock, which is up about 70 percent since Mayer came aboard last year.

At the same time, her comments leave the door open to being opportunistic. No CEO wants to be handcuffed by their words, so the “never say never” line is frequently deployed to give them a convenient out in situations like this. That way, if Yahoo does end up buying Hulu it doesn’t look like she misled investors about the company’s plans. Indeed, as Peter Kafka, the AllThingsD reporter who broke the Tumblr deal story with colleague Kara Swisher, noted in a tweet, Yahoo said it only planned to do small deals before spending $1.1 billion on Tumblr.

It is unclear how much and how serious is Yahoo’s bid for Hulu. Reports suggest a floor price of $500 million and likely going up from there as Hulu’s owners grant more rights access.

Regardless, if Yahoo doesn’t buy Hulu Mayer can point to her comments and accurately tell investors the company isn’t going to spend frivolously. And if Yahoo does end up buying Hulu, Mayer can tell investors and the media that when it comes to deals, “never say never.”

Yahoo! Chief Executive Marissa Mayer. Stephen Lam / Reuters

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