Digital Media

Mobile advertising company Quattro Wireless confirmed Tuesday that it's been acquired by Apple, in a blog post by Quattro CEO Andy Miller, who's identifying himself now as Apple vice president of mobile advertising.

A price wasn't named, but AllThingsD reported that it's $275 million when it broke the news on Monday.

The announcement comes as Apple increasingly finds itself going head-to-head with Google in new developments in the mobile market. In November, Google announced its $750 million acquisition of AdMob, a Quattro competitor. Government regulatory bodies, however, may slow down that purchase.

Google also just unveiled the Nexus One, the Google-branded "superphone" running its Android operating system. Available for sale without a carrier contract, it's widely considered to be the most viable competitor to Apple's iPhone yet.

Google put out a response (defensiveness thinly veiled) on Tuesday afternoon on its Public Policy Blog. "Today's news that Apple is acquiring one of AdMob's competitors, Quattro Wireless, is further proof that the mobile advertising space continues to be competitive," the post read. "And with more investments and acquisitions in the space, including from established players like Apple and Google, that's a sign that vigorous growth and competition will continue. That's ultimately great for users, advertisers and publishers alike."

Meanwhile, Apple also recently acquired streaming music service Lala, with rumors suggesting that its technology will be used to upgrade the iTunes service.

This post was updated at 12:54 p.m. PT with Google's response.

Please see this disclosure related to me and Google.

According to sources close to the situation, along with its pending bid for Yelp, Google has been in on-again, off-again acquisition talks with Trulia, the real-estate search engine.

It is unclear what price Google would pay, but sources estimate that Trulia's valuation ranges between $150 million and $200 million, although there could be a big premium on that.

Rumors about Google's interest in the real-estate search market--and specifically in Trulia--have been rebounding around Silicon Valley for the last year.

But Google has pulled the trigger on a number of acquisitions of innovative start-ups recently and, sources said, will continue to do so.

Trulia--which is based in San Francisco and allows people to search for a range of data about homes for sale in particular ZIP codes or cities nationwide--is one of the more obvious candidates for the search giant's local and mobile efforts.

Its business and that of its competitors--which is largely based on advertising and lead-generation--has been growing quickly, despite the economic downturn in housing.

More interestingly, Trulia is deeply integrated into Google Maps, an arena the company recently targeted for growth with a series of announcements about new search features.

Trulia has raised about $33 million since 2005, with investors that include high-profile Silicon Valley venture firms Accel Partners and Sequoia Capital.

Interestingly, Accel and Sequoia recently made bank when Google bought AdMob for $750 million.

Trulia's clearest competitor is the larger Zillow, located in the Seattle area. But, sources said, Google is more interested in Trulia, given its location in the Bay Area and lower valuation.

Zillow has raised about $87 million from Benchmark Capital, Technology Crossover Ventures, PAR Capital Management, and Legg Mason.

Redfin, another Seattle-based rival, has raised about $31 million from its own well-known collection of VCs.

This week, Google's interest in Yelp, the local review site, also became public, in a deal that could cost upward of $600 million.

It is all part of a buying spree that Google has engaged in of late, with six acquisitions costing $1 billion so far.

Story Copyright (c) 2010 AllThingsD. All rights reserved.

Now that the digital equivalent of a super-vac, MySpace CEO Owen Van Natta, has sucked up some decent music start-ups--Imeem and iLike--for a song, to bolster the social-networking site's efforts to expand into an entertainment portal, what's next?

According to several sources, the News Corp. unit has turned its omnivorous attentions on Flixster, the popular social-networking site for movies.

Sources said such a deal is not immediately imminent, but that MySpace has been conducting extensive due diligence on the San Francisco-based Flixster, part of a plan to combine it with Rotten Tomatoes, another News Corp.-owned site run by its IGN Entertainment division.

Rotten Tomatoes features mostly premium content, including professional reviews, trailer videos, and news. It has community feature that is just in beta, so it would be a nice fit with Flixster.

How much MySpace would be willing to pay for Flixster is unclear. A MySpace spokeswoman declined to comment at the moment.

In 2007, the start-up was close to being acquired by IAC/InteractiveCorp for $100 million, several sources said. But the deal went south when CEO Barry Diller changed his mind at the last minute.

Founded in 2006 by CEO Joe Greenstein and CTO Saran Chari, Flixster has raised $7 million in funding from Lightspeed Venture Partners, Pinnacle Ventures, as well as garnering an angel investment from Silicon Valley entrepreneur and LinkedIn founder Reid Hoffman.

It has garnered a huge audience--upwards of 50 million--who trade all kinds of recommendations, ratings, news, and even post user-generated movie reviews on its Web site and via widgets on social-networking sites, most of all on Facebook.

While Amazon unit IMDb is still larger in terms of traffic, the more innovative Flixster has been growing much faster and is more social, which makes it attractive to MySpace, sources said.

More important is the mobile growth. Flixster is the No. 1 movie app on Apple's iPhone and leads on other smartphones too.

Story Copyright (c) 2010 AllThingsD. All rights reserved.

If you stepped in late, it sounds awfully dull.

An announcement Tuesday tells us all that "certain assets" of a "white-label" online video service called Joost have been acquired by Adconion Media, which calls itself "the largest independent global audience and content network." The acquisition "will be able to provide advertisers, content owners, and Web site publishers with an end-to-end global video platform and cross-channel video and display ad-serving solution," according to a statement from Adconion CEO Tyler Moebius. Financial terms were not disclosed. Yawn.

But really, it's an exceptionally anticlimactic ending for Joost, a company so secretive and hyped that it was once known, James Bond-like, as "The Venice Project," and which was supposed to kill YouTube and that dastardly Cold War villain known as your cable company. It was a scrappy start-up with roots in lawlessness--founders Janus Friis and Niklas Zennstrom had built onetime file-sharing hub Kazaa--but major street cred, too, as they'd also founded Skype and sold it to eBay. There were impressive backers, too, including CBS (which owns CNET).

What went wrong?

Well, there was a big issue with Joost's downloadable peer-to-peer app. By the time it was released, Web-based video was advanced enough so that a required download was a barrier to entry, not a technical leg up. Some of the big-name content partners seemed to be putting in a halfhearted effort with Joost, offering up reruns and esoteric programs instead of the new programming that people actually wanted to watch.

But perhaps what really doomed Joost was something that was itself supposed to be a flop: When NBC Universal and News Corp. announced their plans to create an online video hub that would rival YouTube and address the rampant issue of piracy, it was referred to disparagingly as "Clown Co." We all know how that one turned out. The finished product, Hulu, was extremely well-received and continues to expand its video library.

There was, briefly, a time when it looked like there was a slight chance that things might turn up for Joost. It did, after all, beat most of its competitors to the release of an iPhone app, and a focus on niche content like Japanese anime seemed like a viable business choice as Hulu increasingly placed an emphasis on the mainstreamiest of the mainstream. Unfortunately, that didn't work either.

There was "a major retrenchment" as Joost reined in its lofty plans. Then it switched business models altogether to the far less glamorous "white-label video solutions" modus operandi.

And then the management debacles became evident. CEO Mike Volpi resigned and then was ousted by shareholders from his role as chairman. Oh, and then the company sued him. Nasty.

Sometimes hype plays out well. Sometimes it just doesn't, and Joost was one of those cases. In spite of the founders' prior successes, truckloads of venture capital dollars, and a few early and impressive content deals, it flopped. The end. Now, per Tuesday's release, it'll be "(adding) many dimensions to Adconion's existing video services and further will solidify its position in the online video and content syndication market."

That's a pretty nice way to put it.

Google has entered into an agreement to acquire online ad-optimization firm Teracent, the search giant announced in a blog post on Monday. The transaction is subject to several closing conditions, but is expected to close by the end of the quarter.

Google said it has been "busy releasing new features and products to help improve display advertising on the Web," according to the blog post. After examining Teracent's technology, the company felt that it fit "neatly" into its display-advertising goals, the blog said.

Teracent certainly brings something new to Google's advertising efforts. The company's technology tweaks images, products, messages, or colors to optimize ad units based on the viewer's location, what language they speak, the kind of content they're viewing, the local time, and how well particular units have performed in the past. It does all that work in real time as the algorithm examines the ad's environment.

"This technology can help advertisers get better results from their display ad campaigns," Google wrote in a blog post. "In turn, this enables publishers to make more money from their ad space and delivers Web users better ads and more ad-funded web content."

Teracent should be integrated into Google's advertising efforts by the end of the quarter. Neither company divulged how much Teracent was acquired for.

Networking giant Cisco Systems announced another acquisition this week. This time the company said it will buy the set-top division of a Chinese digital cable technology company.

Late Monday, Cisco said it would pay a total of about $44.5 million for the set-top unit of DVN. It will pay $17.5 million upfront, and the remaining $27 million will be paid over four years, based on the unit achieving sales milestones.

The deal is expected to close in the first half of next year, and it is subject to the approval of regulators and DVN shareholders.

Cisco is also partnering with the rest of DVN to provide joint customers with expanded services.

The DVN unit being acquired makes products that connect digital signals to televisions. Cisco already makes and sells set-top boxes for customers around the world through its Scientific Atlanta division.

Cisco sees a big opportunity in the Chinese cable market, which it says is the largest in the world with 160 million subscribers and with an additional 200 million subscribers expected to become customers in the next few years.

China is in the process of moving its cable subscribers to digital. The government has mandated that all cable be digital by 2015, Cisco said. Today only about a third of Chinese cable customers are using digital cable.

This is the fourth acquisition that Cisco has announced since the beginning of October. The company has spent about $6.2 billion in total during this shopping spree.

Amazon's acquisition of shoes-and-more retailer Zappos is complete, the e-commerce giant said in a release Monday. The company in July had announced its intent to make the purchase, for about $850 million in cash and stock.

Zappos, which made a name for itself based on outside-the-box customer service principles, will stay independent from the Amazon.com brand and will continue to operate out of its Las Vegas headquarters.

Numbers released by J.P. Morgan Research in conjunction with the acquisition announcement predict that Zappos will post moderate, single-digit growth for the 2009 fiscal year after raking in $635 million in revenues last year.

Since 2006, many observers have scratched their head over what prompted Google to pay $1.65 billion for the video site YouTube. We're now a little closer to the answer.

Google CEO Eric Schmidt said in May, "I believe YouTube was worth somewhere around $600 million to $700 million."

(Credit: Elinor Mills/CNET)

The blockbuster acquisition for the 18-month-old start-up played a large role in sending valuations in the tech sector skyrocketing. Although YouTube made little revenue, the all-stock transaction gave Google control of a company many believed would change the face of mass entertainment. It also led to criticism from skeptics who thought that Google would never get its money back.

Google has revealed little about how it decided to pay $1.65 billion but CEO Eric Schmidt said under oath last spring that he was willing to pay a premium--a big one--for YouTube. Leading up to the acquisition, Schmidt told Google's board of directors that his estimate of YouTube's worth was somewhere between $600 million and $700 million, according to court records reviewed by CNET.

A Google representative declined to comment about Schmidt's valuation.

Schmidt had his reasons for asking his board to OK an offer of $1 billion more than what he thought the site was worth. The CEO made the comments during a deposition he gave in May as part of the copyright lawsuit Viacom filed against Google and YouTube in 2007. In short, he believed that Google had to offer that much, or competitors, presumably Microsoft or Yahoo, would walk away with the increasingly popular video site.

"This is a company with very little revenue," Schmidt said while being questioned by Stuart Jay Baskin, a Viacom attorney. "(YouTube was) growing quickly with user adoption, growing much faster than Google Video, which was the product that Google had. And they had indicated to us that they would be sold, and we believed that there would be a competing offer--because of who Google was--paying much more than they were worth...We ultimately concluded that $1.65 billion included a premium for moving quickly and making sure that we could participate in the user success in YouTube."

Three years later, that user success continues: YouTube has grown from 12 million unique users (in May 2006) to more than 100 million users just in the United States. Every minute, more than 10 hours of video is uploaded to the site. But Google is also fighting a $1 billion copyright lawsuit with entertainment giant Viacom, which claims that YouTube encouraged users to violate its copyright. On top of that, the company is still trying to figure out how to turn its prize acquisition into a profitable business.

YouTube managers have toiled to find the right way to generate revenue, experimenting with a wide range of advertising methods and models--everything from prerolls to overlays. Perhaps most importantly, managers changed their approach to copyright owners.

Whereas Hollywood executives once called YouTube a "rogue company," the video site can now boast numerous partnerships with top entertainment companies, including as Walt Disney, CBS (publisher of CNET News), Sony Pictures, and Metro Goldwyn-Mayer. YouTube also has deals with all four major music labels. And YouTube's finances may finally be turning the corner: company representatives have hinted in the past several months that it's on the road to becoming the kind of revenue generator that Google always envisioned.

Whether Google paid too much for YouTube then is a sort of barroom debate among media analysts, not unlike arguing whether the New York Yankees overpaid on free-agent ballplayers in the off-season. James McQuivey, a digital-media analyst at Forrester Research, said that if he were in Schmidt's shoes, he would have made the same deal.

"It actually becomes worth the additional value because Google can tie all of its advertising expertise and search traffic into YouTube," McQuivey said. "It's not like it's going to pay back that $1.6 billion any time soon, but what it does is, it ensures that these millions and millions of viewers are coming to a Google-owned site rather than someone's else's site...As a loss leader goes, if it never makes its money back, its still going to be worth it."

McQuivey acknowledged that those focusing only on hard business numbers are probably not going to agree with him. Count Josh Martin among them. Martin, a research analyst, was an early skeptic of YouTube's profit potential, arguing on behalf of Yankee Group Research that Google overpaid.

"I don't think Schmidt is wrong in assuming that someone would have overpaid for YouTube," Martin said. "If Google was willing to overpay for it, then someone else would have too. But it was a bad business decision for Google. We said it at the time, and three years later, we have been proven right."

Martin said that when Google priced YouTube, it should have deducted heavily for the legal liabilities, as well as for the company's ability to draw an audience, if it couldn't offer pirated content.

"You go back to the reason why YouTube was popular, and it was because of (the 'Saturday Night Live' skit) Lazy Sunday," Martin said. "That is what put YouTube on the map. So it was popular because it had access to content that it shouldn't have had and that you couldn't get elsewhere because no one else was willing to put it up illegally...Clearly, (Google's leaders) needed to understand what was driving momentum behind YouTube."

The following is an edited excerpt of Schmidt's deposition:

Stuart Jay Baskin, a Viacom attorney: And what was management's valuation?

Schmidt: Much lower than we paid for it.

Baskin: And how was that communicated to the board?

Schmidt: I told them.

Baskin: So why don't you tell us what you remember telling the board in connection with the valuation?

Schmidt: I believe YouTube was worth somewhere around $600 million to $700 million.

Baskin: And you communicated that to the board?

Schmidt: I did.

Baskin: Of Google?

Schmidt: I did.

Baskin: What methodology did you use to come up with that number?

John P. Mancini, an attorney working for Google, objects.

Schmidt: My judgment.

Baskin: Was it based on cash flow analysis? Comparable companies? What were you using as the basis for your judgment?

Mancini objects.

Schmidt: It's just my judgment. I've been doing this a long time.

Baskin: So you orally communicated to your board during the course of the board meeting that you thought a more correct valuation for YouTube was $600 million to $700 million; is that what you said, sir?

Mancini objects to characterization of the testimony.

Schmidt: Again, to help you along, I believe that they were worth $600 million to $700 million.

Baskin: And am I correct that you were asking your board to approve an acquisition price of $1.65 billion; correct?

Schmidt: I did.

Mancini objects.

Baskin: I'm not very good at math, but I think that would be $1 billion or so more than you thought the company was, in fact, worth.

Mancini objects.

Schmidt: That is correct.

Later...

Baskin: Can you tell us what reasoning you explained?

Schmidt: Sure, this is a company with very little revenue, growing quickly with user adoption, growing much faster than Google Video, which was the product that Google had. And they had indicated to us that they would be sold, and we believed that there would be a competing offer--because of who Google was--paying much more than they were worth. In the deal dynamics, the price, remember, is not set by my judgment or by financial model or discounted cash flow. It's set by what people are willing to pay. And we ultimately concluded that $1.65 billion included a premium for moving quickly and making sure that we could participate in the user success in YouTube.

Time Warner is not interested in a bidding war for NBC Universal, according to Jeff Bewkes, CEO of the media conglomerate.

Bewkes, who was being interviewed Friday for The Atlantic's First Draft of History conference at the Newseum in Washington, D.C., said big media mergers hardly ever work.

Jeff Bewkes, Time Warner chairman and CEO

(Credit: Time Warner)

"Some deals work in media, but most have not," he added. "Over the past 10 to 15 years, there is a very low percentage of deals that have delivered what they would deliver, in terms of return on investment."

After the interview, which was streamed live online, Bewkes told a Reuters News service reporter why his company isn't interested in bidding for NBC Universal. Earlier this week, reports surfaced that Comcast, the largest cable operator in the United States, is in talks to buy a controlling stake in the media company, owned by General Electric and Vivendi.

"There's no real need or benefit for us to take on the various aspects of NBC," Bewkes told Reuters in an interview at the conference. "We have a lot of good things, and so we don't see that as particularly attractive."

Time Warner knows a thing or two about failed mergers. In 2000, it acquired AOL in a stock deal that was valued at the time at about $160 billion. When the merger was first announced, it was hailed as a major milestone, a historic marriage of online media and print and broadcast media. But only a few years into the merger, it became apparent that the deal was doomed. By 2008, Time Warner had confirmed that it was dumping AOL altogether.

Since taking the helm as CEO of Time Warner in 2008, Bewkes has tried to keep Time Warner focused on its core business of creating content. Instead of acquiring new properties and diversifying the business, Bewkes has made cuts. Besides spinning off AOL, he also shed the company of its cable division.

While Bewkes may not see a need to merge with another big media company, he does see the importance of partnering with other players, such as Comcast. Earlier this year, the companies announced that they were testing service that allows Comcast cable subscribers to view online TV shows and movies from several Time Warner cable channels, such as TNT and TBS.

Bewkes said expanding access to TV shows and movies online will actually grow the audience for its content.

"With HBO, we learned that putting shows on demand increased viewership," he said. "So viewership goes up, and viewers get to watch (what) they want, when they want. And they get to select their favorite shows from their favorite channels."

Other changes in the media business that Bewkes predicts includes the end of print magazines and newspapers. Instead, he envisions people using e-readers such as the Amazon.com Kindle to get access to periodicals. He said that soon, many manufacturers will have e-readers on the market and that these devices will be much more affordable for average consumers.

Separately, Bewkes told Bloomberg that the company was not interested in selling its Time Inc. magazine unit.