C
Clay
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Murdoch And AOL Join Fight Over Yahoo
News Corp. May Bid With Microsoft
By Peter Whoriskey and Frank Ahrens
Washington Post Staff Writers
Thursday, April 10, 2008; D01
The competition for Yahoo heated up last night, as the Internet portal
became the prize in a sudden and furious flurry of dealmaking among
the world's largest media and Internet titans.
Rupert Murdoch's News Corp., the world's largest media company, is in
talks with software giant Microsoft over a possible combined bid for
Yahoo, according to a source close to the discussions.
Yahoo, meanwhile, is working out a complicated deal to acquire most of
AOL from Time Warner, the world's second-largest media company, in a
move that would create the Internet's largest portal, according to a
source close to those talks.
Both sources spoke on the condition of anonymity because the
negotiations are private. None of the companies would comment on the
deals.
The escalation comes as Yahoo is fighting to maintain its independence
and resist Microsoft's offer, originally made about two months ago and
now worth $42 billion. Yahoo, which has called the bid undervalued,
has been under increasing pressure from shareholders to present an
alternative proposal.
The global media giants are jockeying against one another in a high-
stakes race to seize control of Internet advertising, which is growing
at a 20 percent yearly clip.
Although Yahoo claims the most users on the Internet, it has been
unable to turn that traffic into money, opening the door to a
potential buyer and attracting Microsoft, which would like to
challenge Google for a bigger piece of search-based advertising
revenue.
Under the terms of the possible Time Warner deal, the AOL unit would
become part of Yahoo. In exchange for AOL and an undisclosed sum, Time
Warner would receive a 20 percent stake in the enlarged company, said
the source, who cautioned that the terms were not final and that the
deal could founder.
In the unlikely event that both deals close, News Corp. and Microsoft
would control Yahoo, MSN, MySpace and AOL, a colossal and unrivaled
combination that would reach nearly every corner of the Internet and
nearly every user.
Yahoo also announced yesterday that it would run a limited test of
Google's search-based advertising, beginning this week. Search queries
entered by Yahoo users will return results generated by Yahoo as
before, but the ads running alongside the results will be provided by
Google.
"Yahoo's board of directors is exploring strategic alternatives to
maximize stockholder value, including exploration of potential
commercial arrangements," the company said in announcing the Google
test.
The experiment is expected to last up to two weeks and will be limited
to no more than 3 percent of Yahoo search queries, the statement said.
Google's expertise in serving ads with its own search results is the
source of its riches, and its agreement with Yahoo, if expanded, could
improve Yahoo's lagging financial performance. Yahoo will receive a
share of the revenue generated from the ads. Google already provides a
similar service for the search engine Ask.com.
The possibility of a broader partnership between Google and Yahoo,
meanwhile, immediately provoked skepticism from those who say that
such an agreement would run afoul of antitrust laws.
If the arrangement is expanded so that Google provides ads to all of
Yahoo's search queries, it would give Google control of as much as 84
percent of the search on the Internet, according to Compete, a market-
research firm. By some measures, search ads are the largest single
type of online advertising.
"Antitrust authorities would be quite skeptical," said former FTC
commissioner Christine Varney, especially if regulators view search
advertising as one market.
"Following closely on the heels of Google's acquisition of
DoubleClick, this Google-Yahoo alliance would represent even further
consolidation in the Internet advertising market," said Sen. Herb Kohl
(D-Wis.), chairman of the Senate Judiciary Committee's subcommittee on
antitrust, competition policy and consumer rights. "We must ensure
that this consolidation does not foreclose needed competition or harm
consumers."
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-C-
News Corp. May Bid With Microsoft
By Peter Whoriskey and Frank Ahrens
Washington Post Staff Writers
Thursday, April 10, 2008; D01
The competition for Yahoo heated up last night, as the Internet portal
became the prize in a sudden and furious flurry of dealmaking among
the world's largest media and Internet titans.
Rupert Murdoch's News Corp., the world's largest media company, is in
talks with software giant Microsoft over a possible combined bid for
Yahoo, according to a source close to the discussions.
Yahoo, meanwhile, is working out a complicated deal to acquire most of
AOL from Time Warner, the world's second-largest media company, in a
move that would create the Internet's largest portal, according to a
source close to those talks.
Both sources spoke on the condition of anonymity because the
negotiations are private. None of the companies would comment on the
deals.
The escalation comes as Yahoo is fighting to maintain its independence
and resist Microsoft's offer, originally made about two months ago and
now worth $42 billion. Yahoo, which has called the bid undervalued,
has been under increasing pressure from shareholders to present an
alternative proposal.
The global media giants are jockeying against one another in a high-
stakes race to seize control of Internet advertising, which is growing
at a 20 percent yearly clip.
Although Yahoo claims the most users on the Internet, it has been
unable to turn that traffic into money, opening the door to a
potential buyer and attracting Microsoft, which would like to
challenge Google for a bigger piece of search-based advertising
revenue.
Under the terms of the possible Time Warner deal, the AOL unit would
become part of Yahoo. In exchange for AOL and an undisclosed sum, Time
Warner would receive a 20 percent stake in the enlarged company, said
the source, who cautioned that the terms were not final and that the
deal could founder.
In the unlikely event that both deals close, News Corp. and Microsoft
would control Yahoo, MSN, MySpace and AOL, a colossal and unrivaled
combination that would reach nearly every corner of the Internet and
nearly every user.
Yahoo also announced yesterday that it would run a limited test of
Google's search-based advertising, beginning this week. Search queries
entered by Yahoo users will return results generated by Yahoo as
before, but the ads running alongside the results will be provided by
Google.
"Yahoo's board of directors is exploring strategic alternatives to
maximize stockholder value, including exploration of potential
commercial arrangements," the company said in announcing the Google
test.
The experiment is expected to last up to two weeks and will be limited
to no more than 3 percent of Yahoo search queries, the statement said.
Google's expertise in serving ads with its own search results is the
source of its riches, and its agreement with Yahoo, if expanded, could
improve Yahoo's lagging financial performance. Yahoo will receive a
share of the revenue generated from the ads. Google already provides a
similar service for the search engine Ask.com.
The possibility of a broader partnership between Google and Yahoo,
meanwhile, immediately provoked skepticism from those who say that
such an agreement would run afoul of antitrust laws.
If the arrangement is expanded so that Google provides ads to all of
Yahoo's search queries, it would give Google control of as much as 84
percent of the search on the Internet, according to Compete, a market-
research firm. By some measures, search ads are the largest single
type of online advertising.
"Antitrust authorities would be quite skeptical," said former FTC
commissioner Christine Varney, especially if regulators view search
advertising as one market.
"Following closely on the heels of Google's acquisition of
DoubleClick, this Google-Yahoo alliance would represent even further
consolidation in the Internet advertising market," said Sen. Herb Kohl
(D-Wis.), chairman of the Senate Judiciary Committee's subcommittee on
antitrust, competition policy and consumer rights. "We must ensure
that this consolidation does not foreclose needed competition or harm
consumers."
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-C-
