LeEco, China’s leading online video company, paid about 5.2 million an acre to buy Yahoo’s raw land in Santa Clara.
According to banking consultant Bruce Lawrance, the mega-valuation for developmental land zoned for light office/industrial stunned Silicon Valley real estate interests. ‘Leshi Internet Information & Technology’, known as “LeEco” and headquartered in Chaoyang District of Beijing, paid $250 million for a 48.6-acre site approved by the city to build up to 3 million square feet of buildings to house about 12,000 workers. According to the Santa Clara County Clerk’s office, Yahoo stands to net about $143 million profit over the $106 million the company paid for the site in 2006.
Breitbart News reported in February that the FCC’s new “Net Neutrality” policies substantially undermined big U.S. telecommunications companies’ business model by reclassifying broadband Internet access as a regulated telecommunications service under Title II of the Communications Act of 1934.
The Net Neutrality decision was hailed by the Silicon Valley tech giants companies for giving the FCC authority to prevent Internet service providers from forcing customers, online sites, and internet-dependent services to pay for reliable access. The FCC’s Republican-appointed Commissioner Ajit Pai said that it was “sad to witness” Obama Administration intrusion replacing Internet freedom with “government control.”
The U.S. Telecom Association warned in a brief filed as part of an April 2015 industry-wide lawsuit against the FCC, that Internet service providers wouldn’t commit to deep investments for maintaining infrastructure if they had to comply with the proposed “Net Neutrality” rules.
But the FCC February ruling kicked off a bidding war between the major telecommunication for Yahoo, Inc. (YHOO: NASDAQ) legacy email service and other Internet-related units. In response, Yahoo formed an Independent Board of Directors’ Committee and hire three investment banks to engage with “potentially interested strategic and financial parties.”
Reuters reported on June 13 that telecommunications rivals AT&T and Verizon Communications have been chosen as third round finalists in the auction of Yahoo’s core internet assets. It is believed that the range of bids has moved up in value over the last 120 days to the $3.5 billion to $5 billion range.
Founded in November 2004 by Jia Yueting, LeEco Group is engaged in a broad array of tech businesses, including Internet TV, video production and distribution, so-called smart gadgets, e-commerce, eco-agriculture and Internet-linked electric cars. It is believed that the Santa Clara site will support LeEco’s North American R&D operations and further development of its “Le Eco System” online video platform launched in 20014 that features content, devices, and applications.
LeEco’s is virtually unheard of in the United States, but is referred to as “the Netflix of China.” The company is known to be funding a secretive car startup called “Faraday Future” and plans to build a massive electric car factory at Navy’s former Mare Island shipyards site in Vallejo.
The PhoneScoop blog reported that LeEco is currently negotiating with rights holders for U.S. video content and plans to launch its smartphones and video streaming services to the U.S. this fall.
The former Yahoo property is mostly vacant land and has only been used lately as parking for Levi’s Stadium events, including San Francisco 49’ers games and concert events. Yahoo still owns its 1 million square foot operating a site and another piece of raw land in neighboring Sunnyvale. The company has given no indication regarding their intention to keep or sell the Sunnyvale properties.