Why someone might still want to buy Yahoo

Marissa Mayer, Yahoo
Elijah Nouvelage | Reuters

As telecommunications companies like Verizon attempt to become larger media conglomerates, Yahoo's media business could still be valuable.

"Yahoo is still an ongoing operation that generates traffic," said Gartner vice president distinguished analyst Andrew Frank. "They still have that huge asset in their mail system. I think they still generate enough revenue to make it work, considering a media basis."

The third round of bids for Yahoo is expected today, according to Recode. Remaining bidders including Verizon and a group led by Quicken Loans' Dan Gilbert, who is backed by Warren Buffett. Bids have reportedly ranged from $3.5 billion to more than $5 billion.

Yahoo still remains one of the highest trafficked online destinations for its core verticals: News, sports, finance and lifestyle. Its "mavens" — mobile, video, native and social platforms – grew 45 percent year-over-year to $1.6 billion last year. More than $1 billion of that figure was due to mobile, which many consider the future of digital advertising. The company's overall financial picture remains bleak, though. Gross revenue in Q1 was $1.09 billion, against the comparable year-ago figure of $1.23 billion.

Despite laying off 15 percent of its staff in February, Yahoo has insisted that it is still investing in its media properties. Its latest strategy is to focus on its main topics, as well as develop advertising products.

CNBC valued Yahoo's core business at $6 to $7 billion, and a Reuters report suggested that its Web business is worth "several billion." Variety has pegged Yahoo's core advertising business at $1.5 billion.

Verizon has the technical components needed to create addressable and programmatic TV advertising opportunities, but it needs to premium content for marketers to advertise on, said Frank. Verizon may see a Yahoo media takeover as a way to quickly become a stronger media property, he said.

The telecommunications company acquired AOL in May 2015 for $4.4 billion. This year, it purchased Complex Media in partnership with Hearst, as well as acquired a stake in digital media entertainment company AwesomenessTV. Verizon also held a splashy Digital Content NewFront presentation in New York, announcing to advertisers the breath of its original content.

"Verizon thinks they can do something in digital the way Comcast has done in TV," Frank said. "Putting together Yahoo and AOL is probably bigger than the sum of its parts, and they want to be a media and advertising powerhouse."