Rumours of a Twitter buyout have been circulating over the past few days after reports suggested that Rupert Murdoch's News Corp was considering an acquisition or stock takeover of the social media platform.
News Corp and Twitter have both denied any truth to the rumours but that didn't stop shares in the latter shooting up 14 per cent on Wednesday afternoon (20 January) in the peak of market speculation, lifting the stock from a record low.
Tech website re/code said the social media site had made itself a potential takeover target thanks to its dwindling stock price, which has been steadily declining over the past few years. The value of its stock is now two-thirds of the value it was during its pomp. Up until the close of Tuesday (19 January), the stock had fallen nearly 41 per cent since co-founder Jack Dorsey was named permanent CEO in October.
For News Corp, the digitalisation of news and increasing number of people consuming news almost exclusively through platforms like Facebook and Twitter would make it a strategic investment.
Jan van Vonno, senior research Analyst at IDC European Software, told The Drum: “These platforms have an opportunity to manipulate the content we see as an audience. They dictate where and how content is being consumed, often without redirecting to the source. So there is no need for consumers to leave the platform. That is a powerful advantage to have."
Twitter has tried to play this off this with the launch of Moments, a platform curated by editorial staff to provide users with the best, most relevant news stories. Although little of has been said on how Moments has performed, Twitter is clearly trying to strengthen user ability to consume news within the interface, effectively emulating a publisher.
For News Corp then, the investment would be a no-brainer.
“It would be advantageous for News Corp to have a better understanding, and thus build on a platform like Twitter, since mature platforms are not going to shift that much in the short-term," added van Vonno.
But what about for Twitter? In the last few months Twitter has been working hard to reinvigorate its offering to attract more users and brands, with launches such as Moments and a proposed increase to its character limit.
“Twitter has been under a lot of stress recently, with declining stock value and the slowing down of user growth. Jack Dorsey (CEO, Twitter) is conscious of this, and might see a buyout from NewsCorp as an opportunity to transform, or in fact reform, what Twitter is, as well as providing an opportunity for improved customer and business services on the platform.”
If Twitter and News Corp are to be believed, the buyout is unlikely but the clear advantages for both means it could be some time before the rumour mill stops turning.
Earlier this month, media financial advisor suggested to The Drum that Time Warner will be NewsCorp's next venture, citing the need for 21st Century Fox to increase its streaming ability as a reason for Murdoch's interest in the Time Warner empire, which owns cable division HBO.