News Corp, AOL Play Role In Yahoo Drama

    April 10, 2008
    WebProNews Staff

Additional Internet players join the Microsoft bid-for-Yahoo fray, with Rupert Murdoch siding with Steve Ballmer while Jeff Bewkes pairs with Jerry Yang for the endgame battle.

Microsoft’s ultimatum to Yahoo to either start negotiating or face a hostile fight for control of its board served as a catalyst to a flurry of activity over the next several days. Yahoo told Microsoft to take a hike again, while making a little deal with Google to show AdSense ads in Yahoo Search.

Like the big finale of a monster movie of yore, the huge scenery-chewing critters started choosing sides for the breath weapon-filled blaze of the last battle before the end credits. The Wall Street Journal said Yahoo and AOL are working on a deal to combine their operations, and stick a thumb in Microsoft’s eye.

“The AOL-Yahoo deal under consideration would include the repurchase of some Yahoo shares at a price above Microsoft’s offer. Taken together with a possible search advertising pact with Google, the plan could give Yahoo an alternative to a Microsoft takeover,” the Journal said.

But wait! Microsoft’s initial proposal to buy Yahoo may get a boost from News Corp’s magnate, Murdoch. The New York Times noted the possibility Ballmer could enlist Murdoch’s help in adding some cash to the Yahoo offer.

“News Corporation would probably contribute its Fox Interactive Media unit, which includes MySpace, and possibly cash to a partnership with Microsoft as part of an acquisition of Yahoo, they said,” the Times observed, citing sources close to the discussions.

Which Internet monolith will you prefer? Yahoo, MSN, and MySpace/Fox Interactive, or AOL/Yahoo? One has to think Yahoo shareholders are rooting for the former, as Murdoch’s backing means a higher price per share for the acquisition.

Yahoo itself has said they are not against a deal with Microsoft. They are just angry that market forces drove the price of Yahoo shares down to a point where they feel Microsoft would get a tremendous bargain with its initial proposal.

If Murdoch makes more money available for Microsoft’s proposal, Yahoo risks a lot more lawsuits from shareholders if they reject a renewed offer out of hand.