Just in case you hadn’t gotten enough news and speculation about the various potential deals surrounding MicroHoo, AOL, and News Corp. there are a flurry of articles (as one might expect) today about all this. The most interesting is probably the one in the Wall Street Journal that interviews ad executives about their thoughts regarding a more consolidated online ad future and the impact it might have on the search marketplace:
“If all of a sudden the cost-per-click prices go very high for Google and the return on investment goes down, you can instantaneously move money away from Google and into Yahoo. If you lose that option to move money into Yahoo or a Yahoo-Microsoft combination, the only option is to retreat from the search market, lower your spend, or grin and bear it,” says Bryan Wiener, chief executive of 360i, a privately held digital agency that allocates $200 million in search-advertising spending a year for marketers including H&R Block, General Electric’s NBC Universal and Office Depot.
Another article that’s interesting is from the WSJ’s Kara Swisher at AllThingsD, which anonymously quotes a bunch of Yahoo executives, saying that they really don’t like a Yahoo-AOL combination:
But, so far, no one I have talked to wants Yahoo to hook up with AOL, including everyone I spoke to yesterday who was at the lunch, all of whom consider the Time Warner property slow-moving, weak in technology and saddled with a largely dispirited staff.
“We have enough problems without getting theirs, which are much worse,” said one exec. “No one here, except Jerry and the board, has any enthusiasm for it.”
Swisher creates the (probably false) impression that Yahoo management is uniformly against an AOL deal, except for CEO Jerry Yang. She suggests by contrast that most employees favor the Microsoft acquisition, though are tired of the distraction:
To be fair, after talking to dozens of employees at all levels of the company, I have found overall feelings are genuinely mixed about a Microsoft takeover of Yahoo too–they like the muscle, money and mass Microsoft brings, but are nervous to become employees of the controversial company.
To that end, another article in the WSJ surveys the current state of the deal and handicaps the various competitors involved. It argues that Microsoft is still likely to be the winner of the Yahoo derby. Perhaps the most interesting part of the piece is the discussion of News Corp.’s flip-flop from direct Yahoo discussions to a potential alliance with Microsoft:
The latest Microsoft-News Corp. discussions got more serious after News Corp.’s own discussions with Yahoo — about trading MySpace and some other Web sites for a stake in the Internet company — cooled because Yahoo wouldn’t agree to a $10 billion to $15 billion valuation for the News Corp. properties, according to people familiar with the talks. Microsoft and News Corp. last year had discussed a broad advertising pact that fell apart when News Corp. chose other partners for an online video service called Hulu, according to a person familiar with the situation.
Later last year, the two companies started to talk about options for Yahoo, according to a person familiar with Microsoft’s thinking. The plan the two companies discussed, according to this person, was for Microsoft to operate Yahoo’s search and advertising technology, while News Corp. would control everything else, including Yahoo’s broad array of online media properties.
A partnership with News Corp. could allow Microsoft to focus on the software and technical underpinnings of online services while offloading content and information — historically weak points for the software company — to News Corp., which specializes in that realm. “All Microsoft cares about is search and the ad engine,” one person familiar with the situation said . . .
People close to News Corp. say the company has several reasons for wanting to stay involved in a deal. News Corp. continues to weigh how it might sell MySpace, which faces steep competition. The site continues to grow overall, but some executives feel its growth may have peaked.
Saul Hansell at the NY Times (on Bits) presents some interesting, alternative scenarios that may merge from all the discussions, which could leave Yahoo independent and result in the combinations of others: Microsoft-AOL, News Corp.-AOL, etc. These outcomes are probably unlikely but interesting nonetheless to contemplate.
Another party wading into the MicroHoo fray is the US Congress. House Judiciary Committee Chairman John Conyers issued a statement with other colleagues, which somewhat strangely says, “In February, the House Judiciary Committee announced plans to hold a hearing on the State of Competition on the Internet. Yesterday’s announcement of a two-week trial venture between Yahoo! and Google, as well as reports of a possible Yahoo!/AOL merger, further underscore the need for a hearing on the state of competition on the Internet and online advertising.” (February?)
TechCrunch suggests that there’s something fishy or foul about Congressional involvement. I disagree. However, the government shouldn’t be choosing sides or seeking to insert itself into the debate merely to insert itself, or for the personal publicity of the legislators involved.
Finally, Google CEO Eric Schmidt is apparently being advised by Frank Quattrone on how to play its hand in the Microsoft-Yahoo-AOL-News Corp. game. Quattrone was a controversial investment banker who helped take Netscape and Amazon public, among others. He was tried and convicted on charges surrounding some of the financial irregularities of 1990s IPO market, when he worked at Credit Suisse First Boston. He was later “exonerated” on appeal. Quattrone was one of the first bankers, apparently, to meet with Google in the 90s.