Report: Hungry Bankers Manipulate Press To Kickstart AOL-Yahoo Merger Talks

A riddle, wrapped in a mystery, inside an enigma: according to the Wall Street Journal and Reuters, based on the Journal’s report yesterday, financial advisers have been hired by AOL to “explore various strategic options for the company, one of which includes a possible tie-up” with Yahoo. This is just the latest installment of the long-running speculation about a Yahoo-AOL merger, which started when Microsoft was trying to take over Yahoo.

AOL is trying reinvent itself under former Googler Tim Armstrong. The company, however, saw a steep ad revenue decline in Q3, though earnings were positive. So I suppose it’s appropriate to “explore” options if organic activity isn’t doing it for the company. AOL is public, of course, and must generate positive momentum to maintain and grow its share price. Absent organic growth more extreme measures will be demanded by shareholders.

Kara Swisher at AllThingsD, which is owned by the WSJ’s parent corp, critiques the WSJ piece and smacks down the rumors as spin probably started by bankers themselves (“unnamed sources”) hoping to generate some momentum around the idea of an AOL-Yahoo merger, as well as related fees:

it’s likely it was just those dealmakers, looking to gin up some activity, who are behind the latest spin-riffic article in The Wall Street Journal that reports on machinations by AOL to hire unnamed advisers to carry out all kinds of complex deals

AOL and Yahoo have very similar strategies and both occupy similar positions in the market. They’re both companies that get most of their revenue from display advertising and are seeking to be content producers and aggregators to drive page views and related display impressions.

A merger of the two companies would probably be incredibly disruptive of whatever momentum they each have, result in the loss of hundreds of jobs (maybe thousands) and cause them to lose at least  year while the “integration” took place.

As we know from many failed/disappointing acquisitions or mergers (e.g., AOL-TimeWarner, eBay-Skype, AOL-Bebo, News Corp-MySpace, etc.) bankers make a lot of money in such situations. But what comes out on the other side doesn’t necessarily succeed. Indeed, there’s little guarantee that a combined AOL-Yahoo would do much better than either of the respective companies as independent entities in the market.

Related Topics: AOL: General | Channel: Industry | Yahoo: Business Issues | Yahoo: Employees

Sponsored


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



SearchCap:

Get all the top search stories emailed daily!  

Share

Other ways to share:
 

Read before commenting! We welcome constructive comments and allow any that meet our common sense criteria. This means being respectful and polite to others. It means providing helpful information that contributes to a story or discussion. It means leaving links only that substantially add further to a discussion. Comments using foul language, being disrespectful to others or otherwise violating what we believe are common sense standards of discussion will be deleted. Comments may also be removed if they are posted from anonymous accounts. You can read more about our comments policy here.

Comments are closed.

Get Our News, Everywhere!

Daily Email:

Follow Search Engine Land on Twitter @sengineland Like Search Engine Land on Facebook Follow Search Engine Land on Google+ Get the Search Engine Land Feed Connect with Search Engine Land on LinkedIn Check out our Tumblr! See us on Pinterest

 
 

Click to watch SMX conference video

Join us at one of our SMX or MarTech events:

United States

Europe

Australia & China

Learn more about: SMX | MarTech


Free Daily Search News Recap!

SearchCap is a once-per-day newsletter update - sign up below and get the news delivered to you!

 


 

Search Engine Land Periodic Table of SEO Success Factors

Get Your Copy
Read The Full SEO Guide