If MicroHoo were a movie we might be in Act III, moving quickly toward an exciting climax. It’s a good movie so far because there are equally matched antagonists, unpredictable twists, a concrete deadline, and an uncertain outcome. Indeed, that outcome seems to grow increasingly uncertain amid a surreal shifting of alliances. For example, News Corp. was reportedly in early direct talks with Yahoo about a deal to fold MySpace into the company in exchange for a substantial stake in Yahoo, as a way to deflect the Microsoft bid. Now News Corp. is apparently talking with Microsoft about joining the takeover effort itself.
Yesterday the story emerged that AOL and Yahoo could merge their internet operations. Such a deal had been recently dismissed as improbable; however, it appears that talks are very serious at this point. And, of course, Yahoo announced a preliminary AdWords-outsourcing test with Google yesterday.
Yahoo wants to remain independent (or force Microsoft to raise its bid), Google wants to prevent a MicroHoo combination, TimeWarner wants a deal for AOL (on the right terms), and News Corp. appears to want some piece of the action with a limited investment.
It’s only a matter of weeks — or possibly days — as the action builds to a fever pitch, until we know what will happen to the various characters in this M&A drama. Someday, I imagine, someone will write an actual movie (Oliver Stone?), a theatrical musical, or perhaps a contemporary opera based on the events of this epic saga.