Around the Net
Puzzling Over Potential AOL-Yahoo Tie-Up
- The Wall Street Journal et al, Monday, November 8, 2010 12:43 PM
In recent days, sources tell The Wall Street Journal, "AOL's advisers have been presenting different scenarios to AOL officials that illustrate how the two companies could combine their operations and whether the complexity of any such transaction could be surmounted."
That AOL thinks Yahoo can improve its fortunes, or that such a deal is even feasible, has many scratching their heads. "Any deal between AOL and Yahoo would be fraught with
complexity, not least because of the difficulty in spinning off Yahoo's Asian assets," writes The Journal.
Calling The Journal story, "spin-riffic," BoomTown's Kara Swisher suggests it was planted by investment bankers "looking for fees," which would result
from any merger. "It is the complexity of any of those deals that has put a lot of the takeover, buyout, merger and other scenarios that center around Yahoo--with a side of AOL, as well as News
Corp., Microsoft, Yahoo Japan, the Alibaba Group--on ice."
As the San Franciso Chronicle notes: "One big time investor who looked at the two companies says, 'It looks great
conceptually and everyone gets all hot and bothered ... But when you actually do the numbers, you hit a pretty big wall of impossible.'"
Why get all hot over the prospect of an
AOL/Yahoo merger? As The Journal notes, analysts say it could create a strong competitor in the market for online display ads -- a market that is expected to total roughly $20 billion worldwide this
year, and could reach $50 billion over the next few years.
Perhaps without realizing the potential upside of such a deal, Saturday Night Live recently put the merger talks in the funniest light. In a Weekend Update skit, comedian John Mulaney joked: "I love it. It's
like when two people in a nursing home start dating. They may not have much time left, but at least they'll have each other."
