9 ms·

The biggest merger you didn't hear about today

377 points by madz 13y ago

hkmurakami 13y ago
>So why are we media folk so obsessed with the acquisition of a low-revenue blogging platform and so dismissive of an $11 billion combined revenue drug-maker? Four basic reasons: Where's the "It'll get us pageviews!!!!" motive?
- rndmize 13y ago
  The fourth point in the article?
- wmeredith 13y ago
  The fourth point is specifically about them chasing pageviews: "4. We largely cater to people who spend part of their day on the web, consuming content. Not surprisingly, those people tend to have a particular interest in things that involve the web and web content. It's a huge built-in audience, and we reporters know that our bread is ultimately buttered by pageviews."
  - hkmurakami 13y ago
    imo that's a really masked way of presenting things, since it turns "we're doing this for our bottom line!" into "we're doing it for you guys!"
aeturnum 13y ago
The reasons listed are pretty silly and jaded. The reason the Tumblr acquisition is bigger news is simple: it's a big player in a fast growing economic sector. As big as both Warner Chilcott and Actavis are, their industry is mature. The Warner Chilcott acquisition is unlikely to shake things up. Tumblr is one of the "not facebook" players in social that's gotten a lot of mind share. If and how they can turn that mind share into revenue is important to the sector (and the market).
- jmduke 13y ago
  You didn't refute anything in the article. You're saying you think the Tumblr acquisition gets more attention because it has a lot of mindshare (which is circular logic) and because internet content is a faster growing market than pharmaceuticals (which I have no way of knowing whether or not that's true, but its not as if Primack is arguing the opposite.)
  - beat 13y ago
    Bah. How much coverage do we get for, say, some random has-been celebrity's drunken arrest versus wars that cost a lot more than $11B? What the media chooses to cover (and what consumers choose to read, since we no longer have the limited-sources excuse) has pretty much nothing to do with the actual big-picture importance of the events.
    - w1ntermute 13y ago
      That's exactly the point the article is making and trying to correct.
      - dakrisht 13y ago
        People have lost touch with reality a LONG time ago. They do not care about health (America is the fattest, unhealthiest country on the planet), they don't care about science & technology (Tumblr, IG, FB, reality TV, TMZ, etc. dominate the news/app/entertainment spectrum and bring little to no value), they care about GIFs, cats, Kim Kardashian and other brain dead agenda. It's very unfortunate but that's the way it is. People could care less about Warner Chilcott. They care about stupidity. Companies like IG, Tumblr, and others are smart because they seem to employ the "if you can't beat em, join 'em" logic.
        gashad 13y ago
        > People could care less about Warner Chilcott Couldn't. "People couldn't care less ..."
notjustanymike 13y ago
I don't think they're totally in the wrong reporting on on tumblr. The purchase of Tumblr by Yahoo is far more relevant to the majority of readers than Warner Chilcott. We use and interact with Tumblr, know about it's features, and understand the history of the new owner. This isn't just a story about a big number.
- jmduke 13y ago
  We use and interact with Tumblr, know about it's features, and understand the history of the new owner. I am confident the totality of online readers of Tumblr articles interact with the pharmaceuticals made by these two companies more than they interact with Tumblr.
  - guard-of-terra 13y ago
    How so? Most people who use Tumblr daily are under 30. Do people under 30 interact with pharma daily in the US? Why? Anti-depression meds come to mind, but why when you have tumblr?
- mindcrime 13y ago
  The purchase of Tumblr by Yahoo is far more relevant to the majority of readers than Warner Chilcott. I agree that the Tumblr news at least seems more important to a lot of people, and I'll add that perception is not always reality. Just because we've all heard of Tumblr and maybe even use Tumblr, doesn't actually mean that Tumblr is particularly important.
  - dakrisht 13y ago
    Exactly. The fact that that "majority" of "readers" in the US care more about Tumblr means nothing, Tumblr is the farthest away from important when it comes to technology, innovation, and I'll even say communication. It's just another stupid SV deal that guaranteed early investors and VC in Tumblr a nice exit before the wheels fell off that company. Yahoo! has cash and they use it in whatever ways they want. I'll agree with OP that Yahoo is more relevant to the masses, but we all know the masses are constantly up for Darwin Awards.
hyliandanny 13y ago
This was refreshingly honest.
pbreit 13y ago
The drug merger is uninteresting since as two slowish-growing public companies, the value of each are known and after some straightforward cost-cutting it will be business as usual. Yawn.
- mindcrime 13y ago
  The Tumblr merger is uninteresting, as two sluggish and unexciting tech companies merging usually results in one even bigger and more sluggish tech company. After some straightforward cost cutting it will be business as usual. Yawn.
  - pbreit 13y ago
    Unable to downvote. This post is dumb. Tumblr is far from sluggish. Tumblr likely will really operate fairly independently. There won't be any cost-cutting..probably the opposite.
    - mindcrime 13y ago
      Tumblr is far from sluggish. In financial terms, they apparently were not exactly setting the world on fire.
    - qu4z-2 13y ago
      There's a reason you don't have downvote :)
      - pbreit 13y ago
        Are authors unable to downvote replies? That reply definitely deserved downvoting more than my comment.
        qu4z-2 13y ago
        Well, be that as it may, you're probably not very impartial in this matter.
maqr 13y ago
> So we give readers what they want, even if we don't necessarily think it's what they should want. It may mean we're no longer elitist. Or, more likely, it means we're no longer living up to our responsibilities... Sorry. There's a lot to unpack there, but maybe the most revealing thing is that the paragraph made it through CNN's editorial process.
- w1ntermute 13y ago
  And this: > we reporters know that our bread is ultimately buttered by pageviews
- beachstartup 13y ago
  these days, even anti-CNN rhetoric generates pageviews for CNN.
- deleted 13y ago
  [deleted]
- chasb 13y ago
  CNN has an editorial process?
rodly 13y ago
Tumblr's 2012 Revenue was only $13 million? How can they afford 175 employees, a building, infrastructure, etc on $13 million and ~$125 million in seed? I may just have an issue with frugality I suppose.
- CaveTech 13y ago
  In case you haven't heard, having revenue is no longer cool. Having a huge user base on a service that isn't self sustaining is - and people will pay big bucks for those companies!
  - rodly 13y ago
    I suppose this is because there are two outcomes for these huge user bases like instagram and twitter. 1) Get bought by a larger company that can use add your user base to their total user base 2) Start advertising intrusively and hope that you can make enough before your service is no longer favorable Instagram comes to mind for #1. I'm thinking Twitter will go with #2 when investors get sick of no returns year after year.
jmduke 13y ago
Dan Primack, the author of this article, has a daily (M-F) business newsletter called the Term Sheet which is highly worth subscribing to. It does a great job -- as this article does -- of getting outside of the traditional SV VC bubble, focusing on all sorts of coverage from B2B to industrial to even fashion. http://money.cnn.com/investing/ http://money.cnn.com/investing/ (Right sidebar, under 'Newsletters.')
- jonathanjaeger 13y ago
  Yes it is great. It has a voice, isn't too dry, and gets me slightly out of the usual tech bubble-like posts I read elsewhere. Plus he often posts reader comments, which are critical and dissenting views of his own posts.
herbig 13y ago
Now that I've heard about it, I feel like I've been lied to.
mindcrime 13y ago
That was a great post. It's a very valid point that there are things going on in the world which are just as important as - if not for more important than - M&A around Internet media hubs. Seeing even one media site take a refreshingly honest stance like this warms the heart. This many years after the 'net bubble burst, you'd think we would have gotten beyond this obsession with net media sites. But sadly, no... this reminds me of a year or two ago, when there was a similar situation involving, aaaah, I don't remember, maybe Facebook or something, and around the same time there was a huge enterprise software deal (IBM bought somebody, or something). Net result: The Facebook (or whoever it was) deal was reported everywhere, all over HN, Reddit, etc. The other deal? Crickets... Whether all of us want to admit it or not, we do participate in something of an echo chamber here, and anything that comes along now and then and helps tear down those walls, even to a small degree, is a Good Thing. IOW, there's a much bigger world out there than the world of YC, Twilio, Tumblr, Google, Yahoo, Dropbox, AirBnB, Medium, Apple, 37 Signals, Heroku, Square, Twitter, Facebook, Color, etc.
- w1ntermute 13y ago
  The simple fact of the matter is that the (consumer-facing) tech industry is much more sexy than pharma, by virtue of people consciously interacting with tech products on a daily basis. Every Tom, Dick, and Harry these days wants to make a mobile or web app, and it's getting easier for them to do so with each passing year. In comparison, biotech doesn't have this phenomenon, which makes it a good industry to get into if you know what you're doing.
  - mindcrime 13y ago
    "Sexy", maybe. Depending on how you define that, and on your perspective. But more important in the general sense? I think you'd have a harder time supporting that argument if you tried to make it. And anyway, I don't think anybody is arguing for a "black and white" world where one or the other of these deals gets all of the media attention and the other goes completely ignored... it seems that the call is to acknowledge both and treat them both as potentially very important.
gcheong 13y ago
It might be better for companies not to have such press about their mergers or at least I don't see how it is any advantage for the short term blip media coverage of these kind of events provide. And if you are a value investor, having less noise around the price of a share due to short term media coverage of big events might be an advantage as well.
chasing 13y ago
Tumblr's a consumer-facing media property. That's why it gets more press. More people know about it and directly use their product. (Same with Yahoo!.)
dakrisht 13y ago
It's really unfortunate and sometimes unnerving that we live in a time where most people are so caught up in the hype and bullshit of meaningless companies, actions, ideas and people that have no real importance and benefit to our daily lives. It's even more unfortunate to see the actions of CEOs based on hype, big cash reserves and Silicon Valley VCs begging for an exit. I've been seeing it all day on Twitter: VCs ecstatic about Tumblr's "successful exit", they're done and can now go home and drink champagne. But the problem is not with Tumblr being a blog full of porn and cat GIFs, running out of money, having 175 employees most of which do little, and making $15M vs. $100M projected revenue. The problem is with the state of the industry as a whole. The problem is with a company like Yahoo! rushing to get a deal done for a company that would be worth $100M in 6-months when it runs out of money. It just doesn't make sense. But maybe it's not supposed to. Warner Chilcott is obviously a company that tries to do good and create products to better humanity (for the most part), and I'm not saying that Tumblr is worthless - it isn't - but the madness behind the media, the Yahoo! board meeting on a Sunday to get a deal done before Captain Zuckerberg swoops in (I'm sure he's laughing and could care less) is maddening. This isn't a rant, it's more of a "what the hell is going on with companies and innovation of substance?" I really enjoy Thiels quote of "we wanted flying cars instead we got 140 characters." It really embodies the state of the industry in one sentence. Every month a new chat application gets a $3M round, another photo sharing app gets all the hype, bang with friends is the "it" app - what happened to people actually trying to solve REAL problems? Problems that will enable us to continue as a society and not implode.
- beambot 13y ago
  what happened to people actually trying to solve REAL problems? What did you work on today? (EDIT) Less snarky way of putting it: It's not fair to judge others' motivations -- or to say that Tumblr's employees do "nothing" -- especially if (at the very least) you're not tackling big, "real" problems yourself.
  - dakrisht 13y ago
    What did I work on? Well, to answer your question I've been working on solving major problems affecting our society, which include obesity, diabetes, unhealthy lifestyles, poor nutrition and high blood pressure. With that said, it wasn't a snarky comment - it was an analysis of the state of innovation and business in SV in general. I'm tackling big problems. And I wish more people would do the same. We have a lot of challenges to solve.
tsotha 13y ago
From an investment standpoint the Tumblr acquisition was far more interesting, because it represents a much bigger gamble. Sure, the numbers are relatively small now. But Tumblr is one of those companies that could end up dominating its market segment withing just a couple years. Or (more likely) it could become irrelevant and quietly closed.
- wavefunction 13y ago
  A blogging platform seems like a perfect example of a commoditized software product. Buying these "audiences" never seem to work very well...
xroja 13y ago
>It's easier for most of us to understand what Tumblr makes than what Warner Chilcott makes. I would argue that statement since he says Tumblr is a "blogging platform" and "the latest/greatest means for teens to express themselves". Tumblr is more nuanced than that. It's also a social network and to relegate it to teens seems very out of touch. To me, it's much easier understand what a pharmaceutical company makes (drugs, a physical product) than what Tumblr makes (blog/social network/place for online advertising/???).
kevinalexbrown 13y ago
I'm actually on the fence about which merger is more important. On the one hand, tumblr is a toy[0]. Warner Chilcott, founded in 1968, and having gone through mergers before, is Serious Business. On the other hand, should we really be upset that toy makers are getting a lot of press? I honestly go back and forth on the issue. True, if I had to pick between the medical products of WC/Actavis vs the blogging platform of tumblr I would probably pick WC, because I think the net happiness for the world is probably better served via their drugs than easy blogging access. But there is something delightful about an age in which cool toys get recognized, and I think that's important to remember. Incidentally, does anyone know if mergers like these affect which drugs get offered by a company? I can see the tumblr acquisition having a larger effect on society than the WC/Actavis one if drug companies are less likely to stop producing a drug than tech companies are to shut down a product. 0. I know a lot of toys turn out to be remarkably useful and transformative. That's part of my point.
- anotherbadlogin 13y ago
  But seriously, "blogging"? In 2013? It's incredible that Tumblr is even a going concern, let alone a billion-dollar "company."
- smsm42 13y ago
  OTOH, if tumblr disappeared today, I don't see how that would change the society. Facebook or Reddit - maybe, though even there doubtful, but but I don't see tumblr among the pillars of the society.
- busyant 13y ago
  > Incidentally, does anyone know if mergers like these affect which drugs get offered by a company? I think the FTC can (and does) block pharma mergers which severely reduce competition -- they will either block a merger or force spin-offs of certain divisions in an effort to prevent the acquiring company to corner a market on certain drug therapies (e.g., http://ftc.gov/opa/2009/10/pfizer.shtm http://ftc.gov/opa/2009/10/pfizer.shtm) Finally, I don't know which acquisition is more "important", but I think the primary reason that the Tumblr acquisition makes news is because it has the feeling of a "lottery win". Everybody likes this story: 26-year old CEO, a handful of employees. Maybe they worked hard, but they also caught the wave at the right time. Bunch of young people get rich over the course of a few years. *edit: Many people like to believe that they could get lucky and have a similar payday. That's much more appealing than: company works hard, grows slowly, makes drugs, has setbacks, expands, has more setbacks, gets bought. Middle-aged people then get laid-off so that the acquiring company can squeeze more $$ out of WC's drugs.
Raphael 13y ago
So, where's the article actually about Actavis?
- r00fus 13y ago
  It's a self-referential link, as stated in the article. "And, to be clear, we here at Fortune are certainly part of the editorial imbalance. So far this site has already published three posts about Yahoo's (YHOO) purchase of Tumblr, and none about Actavis buying Warner Chilcott (save for this one)."
- greenyoda 13y ago
  There are so many articles on the Actavis merger already that we don't really need Fortune to write yet another article about it. Here's a sampling: https://www.google.com/search?hl=en&gl=us&tbm=nws&q=actavis&oq=actavis https://www.google.com/search?hl=en&gl=us&tbm=nws&#3...
chenster 13y ago
My problem is that I do not know who the hell is Warner Chilcott neither Actavis. Probably that's the case for a lot of us.
pinaceae 13y ago
Well, but then there is also IMS Health buying 360Vantage. Still software, but in life sciences. There is a lot going on outside the HN bubble, but this is ok, some markets are simply more closed off to outsiders. Life sciences software is not particularly open, a lot of vertical players in there now and "verticalness" is increasing. HNers will likely completely miss that boat, but again, this doesn't mean anything there are enough other things happening and bigger fish to fry.
sgpl 13y ago
I was expecting this post to be about Glencore merging with Xtrata [1]. Although in news for over a year, the merger was completed earlier this month. It is important for the fact that this merger creates the largest commodities trading entity and the fourth largest mining company on the planet. [1] wsj: http://goo.gl/UOaN2 http://goo.gl/UOaN2 [2] wiki: http://goo.gl/faWrJ http://goo.gl/faWrJ
- jacques_chester 13y ago
  Glencore and Xstrata are so incredibly far from the consumer mind that it's hard to explain. Yet the impact of that merger? Ultimately, very large. But it's difficult to make a story out of it. No photogenic women are making instant billionaires out of photogenic high school dropouts. The narrative is dull. Two companies, one which digs and one which deals, have decided zzzzZZzz
will_brown 13y ago
Only in the spirit of media taking a shot at itself, which I think we can all respect, I think the paradigm of the article can be applied to any type of news story. For example, 14,612 people were murdered in the US in 2011, but how many of those stories were ever heard on national 24 hour news channels, such as CNN? Perhaps a handful through the course of the year which the media focuses in on and exploits to their own financial gain, and the majority of those stories involve attractive white women. It is hard to beat up one anyone openly critiquing themselves, but this could have had much greater impact by examining media behavior vis-a-vis a controversial issue not unequal treatment of two otherwise non-controversial mergers.
deleted 13y ago
[deleted]
zobzu 13y ago
As a reader I'd usually would like to see what I should want. Then I get some value. Unfortunately, what I should want according to others is generally "news that'll make them richers", while I think I just want neutral information ;-) And that's why today what I see is tumblr/yahoo merger stuff everywhere.
gpcz 13y ago
One important detail to remember is that Facebook, Tumblr, Yahoo, Google, etc are not in the search/blogging/social media industry. That's all a smokescreen. People who follow the money and value chain see past the porn and cat GIFs and consider these companies to be in the advertising industry. The average EV/EBITDA ratio for the conventional advertising industry is 7.77 (src: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/vebitda.html http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/... ), while Warner Chilcott's is 2.94 (src: http://www.wikinvest.com/stock/Warner_Chilcott_(WCRX)/Data/EV:EBITDA http://www.wikinvest.com/stock/Warner_Chilcott_(WCRX)/Data/E... ). This implies that the market (in general) gives a higher valuation multiplier for advertising companies than this healthcare company. Then again, Facebook's EV/EBITDA ratio is 49.8 (src: http://www.wikinvest.com/stock/Facebook/Data http://www.wikinvest.com/stock/Facebook/Data ), which makes one wonder: what makes these high-tech mobile advertising companies more valuable than TV/print ads?
- Tossrock 13y ago
  Obvious answer, but targeting is much more effective for online companies, and success is much easier to measure. An online advertising company can give much better, more quantifiable ROI by targeting specific users more likely to convert: in Google's case, it's largely due to the desire to click inherent in search, whereas in Facebook's case it's through deep demographic information. They can also directly measure the effect an advertisement has, by measuring click throughs, etc. Compared to the much more nebulous effects of TV/print ads, this can be highly appealing.
- gizzlon 13y ago
  Bigger opportunities. TV/print ads are pretty much "played out" and nothing earth-shattering is going to happen in that area [0]. Online is still relatively new.. who knows what will happen :) [0] Maybe it could. And should. But I guess most people don't believe that.
jacques_chester 13y ago
Yahoo and Tumblr get more press because they are mass market companies and journalists are in the mass market. Basically, it's availability bias. I whined and moaned about it here: http://chester.id.au/2013/01/05/on-selling-to-consumers/ http://chester.id.au/2013/01/05/on-selling-to-consumers/
sabalaba 13y ago
If you want to read about M&A. Pick up a copy of The Financial Times or The Wall Street Journal.
ChrisNorstrom 13y ago
I feel like we're celebrating whoever can make the most money in the most ridiculous way rather than those who make the most useful thing for society. A lot of kids are growing up with this pathetic and twisted idea of success being... come up with "some stupid internet thing that everyone uses", get money from some rich guys, get advice from other successful guys, grow your stupid internet thing into a business using their money and the hard work of hundreds of employees, be worshiped and become famous. On top of that media and society concentrate worship, idolization, and ass-kissing towards 1 person. It doesn't matter if you came up with the iPad while working at Apple, Steve Jobs will be the one who will be known for it by nearly everyone. Did you redesign Facebook and make hundreds of millions of people rejoice at the new easier layout? No one will know your name, Mark Zuckerberg will be praised. Did you create FarmVille, FishVille, Mafia Wars, Cafe World? Their names will be connected to Mark Pincus, not yours. Not to say that these leaders were lazy, many people have been given hundreds of millions and have wasted it away without having anything to show for it, these founders took the money and trippled it. That takes work & intelligence but it's never done by one person. Yet the success all goes to one person. It's so shallow and superficial & yet there's no one to blame. It's no one's fault. We can't help we celebrate such primitive things. Especially looking at The Kardashians and Paris Hilton. Usefulness need not apply to this contest. Worth seems to be measured in how many people you can get to follow you. 50 years from now all of will be old and we'll read about how some 9 year old made $75 billion dollars by creating a website were kids under 18 can gossip and rate how lame their parents are. You will sigh. You will laugh. And you'll remember it all started in our generation.
- marknutter 13y ago
  I believe it's the novelty of the fact that "some stupid internet thing that everyone uses" was purchased for 1.1 billion that makes it newsworthy. An extremely profitable medical company that very few people come into contact and that makes life saving medicines is purchased for a large amount of money and goes unnoticed and this is somehow surprising? It's the height of pretentiousness to expect that everyone be as interested in the things that you are interested in and to look down on them if they aren't.
  - 13y ago
LekkoscPiwa 13y ago
That's the old rule in investing that things which bring really handsome profits down the line are not this much in the public interest. When I was telling people back in 2007 I'm buying gold and silver they thought I'm crazy. It was waaay to expensive at $600usd and $10 usd respectively. Since then I just heard that gold and silver are "a bubble". Literally, like for past 6 years my family, my coworkers, the media, you name it - treat this investment type with the highest dose of suspicion. While their "investments" (a.k.a. house - a place to live not an investment really) - went bad. It's funny how the markets work. The genuine growth stocks/assets will be the ones that don't bring too much of the media attention and the ones that "climb wall of worry". Gold mining cost is currenly above the price of gold. A bubble? Tumblr P/E (price to earning ratio) is 1:100. And any investor worth his buck knows that anything above 1:15 (some say 1:10 in bad market conditions like we have nowadays) is too expensive. And still everybody wants to buy it, media reports on it all the time, and overnight everybody and their uncle knows who Mr. David Karp is. That's how you spot a bubble. Or at least seriously overvalued asset. And assets are to be bought on cheap and sold expensive not the other way around.
- kfk 13y ago
  Gold mining cost is currenly above the price of gold. A bubble? Where did you get this info?
  - LekkoscPiwa 13y ago
    From: http://www.bloomberg.com/news/2013-04-17/gold-miners-lose-169-billion-as-price-slump-compounds-etf-pain.html http://www.bloomberg.com/news/2013-04-17/gold-miners-lose-16... Quote: "Gold producers, ignored as global stocks rebounded in the past two years and investors turned to exchange-traded funds that track bullion, face closing mines or shutting themselves down after the metal’s worst slump in three decades this week made 15 percent of miners unprofitable." I also read that the biggest gold mine in the world in South Africa (70% world production) is not profitable at these prices. But you'd need to google for that information yourself. Also, I'll add another point. The definition of bubble is that nobody knows that's a bubble. Everybody will think and tell you it's a genuine investment, actually the best investment going on at the moment. That's why one way of making sure you're not investing in overvalued assets is to ask your cab driver if he invests (or would like to invest) in that asset. Now, evey cab driver who drives me stays away from gold because it's a "bubble". But in the day they would all just love to buy Facebook. So media says gold is in bubble. All my friends do. My family does. You check the stats - the price merely covers or doesn't cover mining cost - that's your "wall of worry" factor - now you buy. Don't get me wrong gold will be a bubble. But that's in distant future. That's when I'll be selling. (if im right)

377 points by madz 13y ago

>So why are we media folk so obsessed with the acquisition of a low-revenue blogging platform and so dismissive of an $11 billion combined revenue drug-maker? Four basic reasons: Where's the "It'll get us pageviews!!!!" motive?

rndmize 13y ago
The fourth point in the article?
wmeredith 13y ago
The fourth point is specifically about them chasing pageviews: "4. We largely cater to people who spend part of their day on the web, consuming content. Not surprisingly, those people tend to have a particular interest in things that involve the web and web content. It's a huge built-in audience, and we reporters know that our bread is ultimately buttered by pageviews."
- hkmurakami 13y ago
  imo that's a really masked way of presenting things, since it turns "we're doing this for our bottom line!" into "we're doing it for you guys!"

aeturnum 13y ago

The reasons listed are pretty silly and jaded. The reason the Tumblr acquisition is bigger news is simple: it's a big player in a fast growing economic sector. As big as both Warner Chilcott and Actavis are, their industry is mature. The Warner Chilcott acquisition is unlikely to shake things up. Tumblr is one of the "not facebook" players in social that's gotten a lot of mind share. If and how they can turn that mind share into revenue is important to the sector (and the market).

jmduke 13y ago
You didn't refute anything in the article. You're saying you think the Tumblr acquisition gets more attention because it has a lot of mindshare (which is circular logic) and because internet content is a faster growing market than pharmaceuticals (which I have no way of knowing whether or not that's true, but its not as if Primack is arguing the opposite.)
- beat 13y ago
  Bah. How much coverage do we get for, say, some random has-been celebrity's drunken arrest versus wars that cost a lot more than $11B? What the media chooses to cover (and what consumers choose to read, since we no longer have the limited-sources excuse) has pretty much nothing to do with the actual big-picture importance of the events.
  - w1ntermute 13y ago
    That's exactly the point the article is making and trying to correct.
    - dakrisht 13y ago
      People have lost touch with reality a LONG time ago. They do not care about health (America is the fattest, unhealthiest country on the planet), they don't care about science & technology (Tumblr, IG, FB, reality TV, TMZ, etc. dominate the news/app/entertainment spectrum and bring little to no value), they care about GIFs, cats, Kim Kardashian and other brain dead agenda. It's very unfortunate but that's the way it is. People could care less about Warner Chilcott. They care about stupidity. Companies like IG, Tumblr, and others are smart because they seem to employ the "if you can't beat em, join 'em" logic.
      - gashad 13y ago
        > People could care less about Warner Chilcott Couldn't. "People couldn't care less ..."

notjustanymike 13y ago

I don't think they're totally in the wrong reporting on on tumblr. The purchase of Tumblr by Yahoo is far more relevant to the majority of readers than Warner Chilcott. We use and interact with Tumblr, know about it's features, and understand the history of the new owner. This isn't just a story about a big number.

jmduke 13y ago
We use and interact with Tumblr, know about it's features, and understand the history of the new owner. I am confident the totality of online readers of Tumblr articles interact with the pharmaceuticals made by these two companies more than they interact with Tumblr.
- guard-of-terra 13y ago
  How so? Most people who use Tumblr daily are under 30. Do people under 30 interact with pharma daily in the US? Why? Anti-depression meds come to mind, but why when you have tumblr?
mindcrime 13y ago
The purchase of Tumblr by Yahoo is far more relevant to the majority of readers than Warner Chilcott. I agree that the Tumblr news at least seems more important to a lot of people, and I'll add that perception is not always reality. Just because we've all heard of Tumblr and maybe even use Tumblr, doesn't actually mean that Tumblr is particularly important.
- dakrisht 13y ago
  Exactly. The fact that that "majority" of "readers" in the US care more about Tumblr means nothing, Tumblr is the farthest away from important when it comes to technology, innovation, and I'll even say communication. It's just another stupid SV deal that guaranteed early investors and VC in Tumblr a nice exit before the wheels fell off that company. Yahoo! has cash and they use it in whatever ways they want. I'll agree with OP that Yahoo is more relevant to the masses, but we all know the masses are constantly up for Darwin Awards.

hyliandanny 13y ago

This was refreshingly honest.

pbreit 13y ago

The drug merger is uninteresting since as two slowish-growing public companies, the value of each are known and after some straightforward cost-cutting it will be business as usual. Yawn.

mindcrime 13y ago
The Tumblr merger is uninteresting, as two sluggish and unexciting tech companies merging usually results in one even bigger and more sluggish tech company. After some straightforward cost cutting it will be business as usual. Yawn.
- pbreit 13y ago
  Unable to downvote. This post is dumb. Tumblr is far from sluggish. Tumblr likely will really operate fairly independently. There won't be any cost-cutting..probably the opposite.
  - mindcrime 13y ago
    Tumblr is far from sluggish. In financial terms, they apparently were not exactly setting the world on fire.
  - qu4z-2 13y ago
    There's a reason you don't have downvote :)
    - pbreit 13y ago
      Are authors unable to downvote replies? That reply definitely deserved downvoting more than my comment.
      - qu4z-2 13y ago
        Well, be that as it may, you're probably not very impartial in this matter.

maqr 13y ago

> So we give readers what they want, even if we don't necessarily think it's what they should want. It may mean we're no longer elitist. Or, more likely, it means we're no longer living up to our responsibilities... Sorry. There's a lot to unpack there, but maybe the most revealing thing is that the paragraph made it through CNN's editorial process.

w1ntermute 13y ago
And this: > we reporters know that our bread is ultimately buttered by pageviews
beachstartup 13y ago
these days, even anti-CNN rhetoric generates pageviews for CNN.
deleted 13y ago
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chasb 13y ago
CNN has an editorial process?

rodly 13y ago

Tumblr's 2012 Revenue was only $13 million? How can they afford 175 employees, a building, infrastructure, etc on $13 million and ~$125 million in seed? I may just have an issue with frugality I suppose.

CaveTech 13y ago
In case you haven't heard, having revenue is no longer cool. Having a huge user base on a service that isn't self sustaining is - and people will pay big bucks for those companies!
- rodly 13y ago
  I suppose this is because there are two outcomes for these huge user bases like instagram and twitter. 1) Get bought by a larger company that can use add your user base to their total user base 2) Start advertising intrusively and hope that you can make enough before your service is no longer favorable Instagram comes to mind for #1. I'm thinking Twitter will go with #2 when investors get sick of no returns year after year.

jmduke 13y ago

Dan Primack, the author of this article, has a daily (M-F) business newsletter called the Term Sheet which is highly worth subscribing to. It does a great job -- as this article does -- of getting outside of the traditional SV VC bubble, focusing on all sorts of coverage from B2B to industrial to even fashion. http://money.cnn.com/investing/ http://money.cnn.com/investing/ (Right sidebar, under 'Newsletters.')

jonathanjaeger 13y ago
Yes it is great. It has a voice, isn't too dry, and gets me slightly out of the usual tech bubble-like posts I read elsewhere. Plus he often posts reader comments, which are critical and dissenting views of his own posts.

herbig 13y ago

Now that I've heard about it, I feel like I've been lied to.

mindcrime 13y ago

That was a great post. It's a very valid point that there are things going on in the world which are just as important as - if not for more important than - M&A around Internet media hubs. Seeing even one media site take a refreshingly honest stance like this warms the heart. This many years after the 'net bubble burst, you'd think we would have gotten beyond this obsession with net media sites. But sadly, no... this reminds me of a year or two ago, when there was a similar situation involving, aaaah, I don't remember, maybe Facebook or something, and around the same time there was a huge enterprise software deal (IBM bought somebody, or something). Net result: The Facebook (or whoever it was) deal was reported everywhere, all over HN, Reddit, etc. The other deal? Crickets... Whether all of us want to admit it or not, we do participate in something of an echo chamber here, and anything that comes along now and then and helps tear down those walls, even to a small degree, is a Good Thing. IOW, there's a much bigger world out there than the world of YC, Twilio, Tumblr, Google, Yahoo, Dropbox, AirBnB, Medium, Apple, 37 Signals, Heroku, Square, Twitter, Facebook, Color, etc.

w1ntermute 13y ago
The simple fact of the matter is that the (consumer-facing) tech industry is much more sexy than pharma, by virtue of people consciously interacting with tech products on a daily basis. Every Tom, Dick, and Harry these days wants to make a mobile or web app, and it's getting easier for them to do so with each passing year. In comparison, biotech doesn't have this phenomenon, which makes it a good industry to get into if you know what you're doing.
- mindcrime 13y ago
  "Sexy", maybe. Depending on how you define that, and on your perspective. But more important in the general sense? I think you'd have a harder time supporting that argument if you tried to make it. And anyway, I don't think anybody is arguing for a "black and white" world where one or the other of these deals gets all of the media attention and the other goes completely ignored... it seems that the call is to acknowledge both and treat them both as potentially very important.

gcheong 13y ago

It might be better for companies not to have such press about their mergers or at least I don't see how it is any advantage for the short term blip media coverage of these kind of events provide. And if you are a value investor, having less noise around the price of a share due to short term media coverage of big events might be an advantage as well.

chasing 13y ago

Tumblr's a consumer-facing media property. That's why it gets more press. More people know about it and directly use their product. (Same with Yahoo!.)

dakrisht 13y ago

It's really unfortunate and sometimes unnerving that we live in a time where most people are so caught up in the hype and bullshit of meaningless companies, actions, ideas and people that have no real importance and benefit to our daily lives. It's even more unfortunate to see the actions of CEOs based on hype, big cash reserves and Silicon Valley VCs begging for an exit. I've been seeing it all day on Twitter: VCs ecstatic about Tumblr's "successful exit", they're done and can now go home and drink champagne. But the problem is not with Tumblr being a blog full of porn and cat GIFs, running out of money, having 175 employees most of which do little, and making $15M vs. $100M projected revenue. The problem is with the state of the industry as a whole. The problem is with a company like Yahoo! rushing to get a deal done for a company that would be worth $100M in 6-months when it runs out of money. It just doesn't make sense. But maybe it's not supposed to. Warner Chilcott is obviously a company that tries to do good and create products to better humanity (for the most part), and I'm not saying that Tumblr is worthless - it isn't - but the madness behind the media, the Yahoo! board meeting on a Sunday to get a deal done before Captain Zuckerberg swoops in (I'm sure he's laughing and could care less) is maddening. This isn't a rant, it's more of a "what the hell is going on with companies and innovation of substance?" I really enjoy Thiels quote of "we wanted flying cars instead we got 140 characters." It really embodies the state of the industry in one sentence. Every month a new chat application gets a $3M round, another photo sharing app gets all the hype, bang with friends is the "it" app - what happened to people actually trying to solve REAL problems? Problems that will enable us to continue as a society and not implode.

beambot 13y ago
what happened to people actually trying to solve REAL problems? What did you work on today? (EDIT) Less snarky way of putting it: It's not fair to judge others' motivations -- or to say that Tumblr's employees do "nothing" -- especially if (at the very least) you're not tackling big, "real" problems yourself.
- dakrisht 13y ago
  What did I work on? Well, to answer your question I've been working on solving major problems affecting our society, which include obesity, diabetes, unhealthy lifestyles, poor nutrition and high blood pressure. With that said, it wasn't a snarky comment - it was an analysis of the state of innovation and business in SV in general. I'm tackling big problems. And I wish more people would do the same. We have a lot of challenges to solve.

tsotha 13y ago

From an investment standpoint the Tumblr acquisition was far more interesting, because it represents a much bigger gamble. Sure, the numbers are relatively small now. But Tumblr is one of those companies that could end up dominating its market segment withing just a couple years. Or (more likely) it could become irrelevant and quietly closed.

wavefunction 13y ago
A blogging platform seems like a perfect example of a commoditized software product. Buying these "audiences" never seem to work very well...

xroja 13y ago

>It's easier for most of us to understand what Tumblr makes than what Warner Chilcott makes. I would argue that statement since he says Tumblr is a "blogging platform" and "the latest/greatest means for teens to express themselves". Tumblr is more nuanced than that. It's also a social network and to relegate it to teens seems very out of touch. To me, it's much easier understand what a pharmaceutical company makes (drugs, a physical product) than what Tumblr makes (blog/social network/place for online advertising/???).

kevinalexbrown 13y ago

I'm actually on the fence about which merger is more important. On the one hand, tumblr is a toy[0]. Warner Chilcott, founded in 1968, and having gone through mergers before, is Serious Business. On the other hand, should we really be upset that toy makers are getting a lot of press? I honestly go back and forth on the issue. True, if I had to pick between the medical products of WC/Actavis vs the blogging platform of tumblr I would probably pick WC, because I think the net happiness for the world is probably better served via their drugs than easy blogging access. But there is something delightful about an age in which cool toys get recognized, and I think that's important to remember. Incidentally, does anyone know if mergers like these affect which drugs get offered by a company? I can see the tumblr acquisition having a larger effect on society than the WC/Actavis one if drug companies are less likely to stop producing a drug than tech companies are to shut down a product. 0. I know a lot of toys turn out to be remarkably useful and transformative. That's part of my point.

anotherbadlogin 13y ago
But seriously, "blogging"? In 2013? It's incredible that Tumblr is even a going concern, let alone a billion-dollar "company."
smsm42 13y ago
OTOH, if tumblr disappeared today, I don't see how that would change the society. Facebook or Reddit - maybe, though even there doubtful, but but I don't see tumblr among the pillars of the society.
busyant 13y ago
> Incidentally, does anyone know if mergers like these affect which drugs get offered by a company? I think the FTC can (and does) block pharma mergers which severely reduce competition -- they will either block a merger or force spin-offs of certain divisions in an effort to prevent the acquiring company to corner a market on certain drug therapies (e.g., http://ftc.gov/opa/2009/10/pfizer.shtm http://ftc.gov/opa/2009/10/pfizer.shtm) Finally, I don't know which acquisition is more "important", but I think the primary reason that the Tumblr acquisition makes news is because it has the feeling of a "lottery win". Everybody likes this story: 26-year old CEO, a handful of employees. Maybe they worked hard, but they also caught the wave at the right time. Bunch of young people get rich over the course of a few years. *edit: Many people like to believe that they could get lucky and have a similar payday. That's much more appealing than: company works hard, grows slowly, makes drugs, has setbacks, expands, has more setbacks, gets bought. Middle-aged people then get laid-off so that the acquiring company can squeeze more $$ out of WC's drugs.

Raphael 13y ago

So, where's the article actually about Actavis?

r00fus 13y ago
It's a self-referential link, as stated in the article. "And, to be clear, we here at Fortune are certainly part of the editorial imbalance. So far this site has already published three posts about Yahoo's (YHOO) purchase of Tumblr, and none about Actavis buying Warner Chilcott (save for this one)."
greenyoda 13y ago
There are so many articles on the Actavis merger already that we don't really need Fortune to write yet another article about it. Here's a sampling: https://www.google.com/search?hl=en&gl=us&tbm=nws&q=actavis&oq=actavis https://www.google.com/search?hl=en&gl=us&tbm=nws&#3...

chenster 13y ago

My problem is that I do not know who the hell is Warner Chilcott neither Actavis. Probably that's the case for a lot of us.

pinaceae 13y ago

Well, but then there is also IMS Health buying 360Vantage. Still software, but in life sciences. There is a lot going on outside the HN bubble, but this is ok, some markets are simply more closed off to outsiders. Life sciences software is not particularly open, a lot of vertical players in there now and "verticalness" is increasing. HNers will likely completely miss that boat, but again, this doesn't mean anything there are enough other things happening and bigger fish to fry.

sgpl 13y ago

I was expecting this post to be about Glencore merging with Xtrata [1]. Although in news for over a year, the merger was completed earlier this month. It is important for the fact that this merger creates the largest commodities trading entity and the fourth largest mining company on the planet. [1] wsj: http://goo.gl/UOaN2 http://goo.gl/UOaN2 [2] wiki: http://goo.gl/faWrJ http://goo.gl/faWrJ

jacques_chester 13y ago
Glencore and Xstrata are so incredibly far from the consumer mind that it's hard to explain. Yet the impact of that merger? Ultimately, very large. But it's difficult to make a story out of it. No photogenic women are making instant billionaires out of photogenic high school dropouts. The narrative is dull. Two companies, one which digs and one which deals, have decided zzzzZZzz

will_brown 13y ago

Only in the spirit of media taking a shot at itself, which I think we can all respect, I think the paradigm of the article can be applied to any type of news story. For example, 14,612 people were murdered in the US in 2011, but how many of those stories were ever heard on national 24 hour news channels, such as CNN? Perhaps a handful through the course of the year which the media focuses in on and exploits to their own financial gain, and the majority of those stories involve attractive white women. It is hard to beat up one anyone openly critiquing themselves, but this could have had much greater impact by examining media behavior vis-a-vis a controversial issue not unequal treatment of two otherwise non-controversial mergers.

deleted 13y ago

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zobzu 13y ago

As a reader I'd usually would like to see what I should want. Then I get some value. Unfortunately, what I should want according to others is generally "news that'll make them richers", while I think I just want neutral information ;-) And that's why today what I see is tumblr/yahoo merger stuff everywhere.

gpcz 13y ago

One important detail to remember is that Facebook, Tumblr, Yahoo, Google, etc are not in the search/blogging/social media industry. That's all a smokescreen. People who follow the money and value chain see past the porn and cat GIFs and consider these companies to be in the advertising industry. The average EV/EBITDA ratio for the conventional advertising industry is 7.77 (src: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/vebitda.html http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/... ), while Warner Chilcott's is 2.94 (src: http://www.wikinvest.com/stock/Warner_Chilcott_(WCRX)/Data/EV:EBITDA http://www.wikinvest.com/stock/Warner_Chilcott_(WCRX)/Data/E... ). This implies that the market (in general) gives a higher valuation multiplier for advertising companies than this healthcare company. Then again, Facebook's EV/EBITDA ratio is 49.8 (src: http://www.wikinvest.com/stock/Facebook/Data http://www.wikinvest.com/stock/Facebook/Data ), which makes one wonder: what makes these high-tech mobile advertising companies more valuable than TV/print ads?

Tossrock 13y ago
Obvious answer, but targeting is much more effective for online companies, and success is much easier to measure. An online advertising company can give much better, more quantifiable ROI by targeting specific users more likely to convert: in Google's case, it's largely due to the desire to click inherent in search, whereas in Facebook's case it's through deep demographic information. They can also directly measure the effect an advertisement has, by measuring click throughs, etc. Compared to the much more nebulous effects of TV/print ads, this can be highly appealing.
gizzlon 13y ago
Bigger opportunities. TV/print ads are pretty much "played out" and nothing earth-shattering is going to happen in that area [0]. Online is still relatively new.. who knows what will happen :) [0] Maybe it could. And should. But I guess most people don't believe that.

jacques_chester 13y ago

Yahoo and Tumblr get more press because they are mass market companies and journalists are in the mass market. Basically, it's availability bias. I whined and moaned about it here: http://chester.id.au/2013/01/05/on-selling-to-consumers/ http://chester.id.au/2013/01/05/on-selling-to-consumers/

sabalaba 13y ago

If you want to read about M&A. Pick up a copy of The Financial Times or The Wall Street Journal.

ChrisNorstrom 13y ago

I feel like we're celebrating whoever can make the most money in the most ridiculous way rather than those who make the most useful thing for society. A lot of kids are growing up with this pathetic and twisted idea of success being... come up with "some stupid internet thing that everyone uses", get money from some rich guys, get advice from other successful guys, grow your stupid internet thing into a business using their money and the hard work of hundreds of employees, be worshiped and become famous. On top of that media and society concentrate worship, idolization, and ass-kissing towards 1 person. It doesn't matter if you came up with the iPad while working at Apple, Steve Jobs will be the one who will be known for it by nearly everyone. Did you redesign Facebook and make hundreds of millions of people rejoice at the new easier layout? No one will know your name, Mark Zuckerberg will be praised. Did you create FarmVille, FishVille, Mafia Wars, Cafe World? Their names will be connected to Mark Pincus, not yours. Not to say that these leaders were lazy, many people have been given hundreds of millions and have wasted it away without having anything to show for it, these founders took the money and trippled it. That takes work & intelligence but it's never done by one person. Yet the success all goes to one person. It's so shallow and superficial & yet there's no one to blame. It's no one's fault. We can't help we celebrate such primitive things. Especially looking at The Kardashians and Paris Hilton. Usefulness need not apply to this contest. Worth seems to be measured in how many people you can get to follow you. 50 years from now all of will be old and we'll read about how some 9 year old made $75 billion dollars by creating a website were kids under 18 can gossip and rate how lame their parents are. You will sigh. You will laugh. And you'll remember it all started in our generation.

marknutter 13y ago
I believe it's the novelty of the fact that "some stupid internet thing that everyone uses" was purchased for 1.1 billion that makes it newsworthy. An extremely profitable medical company that very few people come into contact and that makes life saving medicines is purchased for a large amount of money and goes unnoticed and this is somehow surprising? It's the height of pretentiousness to expect that everyone be as interested in the things that you are interested in and to look down on them if they aren't.
- 13y ago

LekkoscPiwa 13y ago

That's the old rule in investing that things which bring really handsome profits down the line are not this much in the public interest. When I was telling people back in 2007 I'm buying gold and silver they thought I'm crazy. It was waaay to expensive at $600usd and $10 usd respectively. Since then I just heard that gold and silver are "a bubble". Literally, like for past 6 years my family, my coworkers, the media, you name it - treat this investment type with the highest dose of suspicion. While their "investments" (a.k.a. house - a place to live not an investment really) - went bad. It's funny how the markets work. The genuine growth stocks/assets will be the ones that don't bring too much of the media attention and the ones that "climb wall of worry". Gold mining cost is currenly above the price of gold. A bubble? Tumblr P/E (price to earning ratio) is 1:100. And any investor worth his buck knows that anything above 1:15 (some say 1:10 in bad market conditions like we have nowadays) is too expensive. And still everybody wants to buy it, media reports on it all the time, and overnight everybody and their uncle knows who Mr. David Karp is. That's how you spot a bubble. Or at least seriously overvalued asset. And assets are to be bought on cheap and sold expensive not the other way around.

kfk 13y ago
Gold mining cost is currenly above the price of gold. A bubble? Where did you get this info?
- LekkoscPiwa 13y ago
  From: http://www.bloomberg.com/news/2013-04-17/gold-miners-lose-169-billion-as-price-slump-compounds-etf-pain.html http://www.bloomberg.com/news/2013-04-17/gold-miners-lose-16... Quote: "Gold producers, ignored as global stocks rebounded in the past two years and investors turned to exchange-traded funds that track bullion, face closing mines or shutting themselves down after the metal’s worst slump in three decades this week made 15 percent of miners unprofitable." I also read that the biggest gold mine in the world in South Africa (70% world production) is not profitable at these prices. But you'd need to google for that information yourself. Also, I'll add another point. The definition of bubble is that nobody knows that's a bubble. Everybody will think and tell you it's a genuine investment, actually the best investment going on at the moment. That's why one way of making sure you're not investing in overvalued assets is to ask your cab driver if he invests (or would like to invest) in that asset. Now, evey cab driver who drives me stays away from gold because it's a "bubble". But in the day they would all just love to buy Facebook. So media says gold is in bubble. All my friends do. My family does. You check the stats - the price merely covers or doesn't cover mining cost - that's your "wall of worry" factor - now you buy. Don't get me wrong gold will be a bubble. But that's in distant future. That's when I'll be selling. (if im right)