SUNNYVALE, CA – Deals and rumors of deals appear to be flying fast and furious in the continuing mystery surrounding who will claim the hand of embattled search engine Yahoo!According to the Washington Post, Rupert Murdoch’s News Corp. — the largest media company in the world — is discussing a possible alliance with software giant Microsoft. Combining their fortunes would allow the potential partners to offer more money to support Microsoft’s $42 billion Yahoo! buyout offer and preclude the need for a hostile takeover battle. Microsoft Chief Executive Officer Steve Ballmer has said his company is prepared to stack Yahoo!’s board of directors in Microsoft’s favor if necessary.
Meanwhile, Yahoo reportedly has been in talks with AOL — a division of the world’s second-largest media company, Time Warner — in what might create what is being termed “the world’s largest internet portal,” according to an inside source the Post did not disclose.
The race to possess Yahoo!, which has fallen in search share over the past year according to audience measurement firm Hitwise, highlights a dedicated effort on the part of major Web players to corral significant shares of the lucrative search-advertising market. Revenues in that segment are growing at an estimated 20-percent annually.
Although Yahoo claims to have the most users on the internet, the number of searches users performed on the site during the period from March 2007 to March 2008 trails category leader Google significantly: Yahoo! claimed 20.29-percent of all U.S. Web searches during the period, while Google claimed 67.25-percent, according to Hitwise statistics.
Microsoft, which owns the MSN search and entertainment portal, would like to challenge Google, and it sees acquiring Yahoo! as the most expedient means to that end.
According to the Post’s anonymous inside source, Yahoo! and AOL are discussing a deal under which Time Warner would tender AOL and an undisclosed amount of money to Yahoo! in exchange for a 20-percent stake in the new search-and-entertainment portal endeavor. The new entity would become a head-to-head competitor to Microsoft’s MSN Network and provide a category of services not yet attempted by Google: entertainment news and user interaction.
If both deals close, Microsoft and Time Warner would control empires that between them touch almost every internet user in almost every category. The two media giants already control MSN, MySpace and AOL. Adding the heretofore fiercely independent Yahoo! would be a coup for either side.
