Apparently, Yahoo! is looking at making acquisitions in social media and video, says Tech Crunch. According to Yahoo CEO Carol Bartz:
“We are very interested in social, and in video technology,” said Bartz. She was particularly bullish on Web video: “This is just the beginning. The whole video area is so exciting. Video advertising growing four times by 2011.”
Here’s the thing I don’t get:
The online video technology game is extremely risky because
- the leading player, YouTube (one of our distribution partners), commands 50% of the market share and it is owned by the most audacious and profitable online business: Google.
- the second player, Hulu (another one of our distribution partners), is owned by the leading media companies (News Corp., NBC, and now, Disney) and views all technology solutions as the problem, just think of what SONY Pictures’ CEO Michael Lynton said today:
I actually welcome the Sturm und Drang I’ve stirred, because it gives me an opportunity to make a larger point (one which I also made during that panel discussion, though it was not nearly as viral as the sentence above). And my point is this: the major content businesses of the world and the most talented creators of that content — music, newspapers, movies and books — have all been seriously harmed by the Internet.
I think net-net, the Web shrinks traditional media businesses, but it creates an amazing opportunity for new media startups to disrupt TV companies. Yahoo! isn’t a startup, sure, but in online video content, it would be a startup with the reach to hit it out of the park.
Either way, this is why I think (biased, of course) that content gives a better risk/return opportunity than technology in video.
But when it comes to Yahoo!, what is even stranger, frankly, is that the company’s history of video technology acquisitions have been suspect at best, Maven, which it bought for $160M, is rumored to be discontinued.
Meanwhile, its content forays were misses at a time when online video advertising was non-existent, let alone embryonic. It was also based on an old media approach, which is doomed to fail online.
If Yahoo! approached content the right way, it can make a killing. Think about it, Bebo fetched a premium when it sold to AOL not because it was yet another social network, but because it was positioned a social content portal:
During her time there, Joanna Shields re-positioned Bebo as a social content portal, instead of a social network, making it more attractive to an old media buyer.
Let’s see: Yahoo!’s attempt at social have trailed everyone. It knows content. And when it comes to being a portal, well, it remains king.
But it’s not just Bebo or Shields. Why do you think Tim Armstrong left Google for AOL? Not just the CEO gig, I think he probably thought social media was overrated, too, and thought AOL was on the right track with its Media Glow (content) unit. Of course, I am guessing… but the man who madea fortune in search thinks content is the next big thing?
I don’t know, but I think Yahoo!’s differentiator should not be in social (Mesh, anyone? How about 360!) but in serving up content that online audiences want.
Hulu became #2 in such a quick time not because of better technology or social media BS, it was the content.
YouTube’s challenge holding on to the throne will be due to content, not a lack of social mojo…
Why can’t anyone recognize this?
Seems obvious. Ms. Bartz seems like a no-nonsense type of person… but to suggest that more social media or video technology represents the holy grail seems a bit off the mark.
Navigation, Content and Communication
Google would be navigation, clearly they won that game. They are now moving towards communications, with things like Gmail… but as email morphs into social networking, they are now moving into that space more and more.
This is why I think Google and Facebook are the real enemies or combatants in that space.
I don’t see MySpace and Facebook as competitors… and this kind of supports my argument that moving forward, MySpace will be increasingly a competitor to Microsoft’s MSN.com and Yahoo.com, which both aggregate content and editorialize it. This also explains why MSFT invested in Facebook, not just to avoid Google from buying/ investing in Facebook, but also as a proxy to fight Google on the communications front.
MySpace will be an entertainment hub, Facebook will be a tech platform, basically, used largely to communicate. Long term, even if Facebook seems to be more valuable, MySpace will generate far more revenue.
When looking for reasons why Tim Armstrong left Google for AOL is the possibility that this was a vote for content over technology.
Reading about how AOL is moving more and more aggressively into content via Media Glow - instead of simply aggregating it via its AOL.com portal - you can’t help but wonder if Armstrong’s move had more to do with content in general and less with Google or AOL. Marty Moe is the senior vice president of AOL’s MediaGlow content division, but Armstrong’s personal investment fund has invested in other content plays such as Associated Content.
Over at Google, the cultural barriers to becoming a producer of news, rather than just a technology company that works with news outlets to distribute news, are steeper. For years the company has held dear the dogma that it does not produce media content.
“We are a technology company, not a media company,” said Google spokesperson Jennie Johnston. “The tremendous amount of expertise that goes into news gathering, editors, journalists – it’s not something we have to be good at.’’
The focus across Google is instead on working with news organizations: “We want to help newspapers distribute their content online, engage their readers better.” Google’s ethos is to “create – but not be creative,” as Johnston put it. It’s an appealing model, and you can’t argue much with the results.
True. Google’s results as a pure play tech company can’t be overlooked, but search advertising is becoming mature and display (yes, display) and mainly video advertising are the next growth areas. To clarify: display is slowing down this year, but the real estate associated with display, which will make way for rich media ads, will soar. That real estate is generally associated not with intent (as is the case with search), but rather: interest. Interest is captured by content, not technology.
This explains the push into content creation.
Other portals are expanding their ambitions, too. Yahoo is moving steadily into web video, with the announcement on Monday of a new celebrity mom show, and there are rumbles that even Google’s Eric Schmidt is reconsidering the technology company’s longstanding aversion to creating its own content, according to one person familiar with his thinking.
As someone who manages relationships with Google (via our partnership with YouTube), I can tell you that while Google/YouTube is a great partner, they really are in many ways new to content and what that entails. To give credit where credit is due: YouTube has grown up and improved so much since we signed a partnership, but for YouTube to be a multi-billion dollar revenue machine, they have a way to go.
As such, whether or not Google becomes successful in content remains to be seen.
AOL, meanwhile, who has the content gene via its Time Warner pedigree, has a better shot than many would expect to win in the next phase of the Web’s boom, which will be looking to cash in on the fact that 47% of people’s time is spent consuming content. With social networking advertising fizzling (eMarketer once again reduced the estimates this week), then professional content’s value continues to soar.
If these companies do emerge as large-scale content creators, it will be worth noting that the once-dowdy AOL is leading the way. New AOL head Tim Armstrong may be inheriting a cargo boat of problems, but the company’s two-year-old drive to become a successful source of content is not one of them.
MediaGlow is home to hit machines like celebrity news site TMZ and niche-oriented, category-leading blogs like Engadget, which regularly breaks technology news, and car-nut magnet Autoblog.The sites together average 73 million unique visitors a month, according to ComScore.
Of course, what better way for Google to catapult itself in the content game than by acquiring AOL, which it already owns 5% of, no?
While 2008 finished off with companies doing their best to cling on to anything to avoid from being sucked into the maelstrom, I think - despite the continued stock market meltdown - that many companies are seeing some stabilization in their core business. In other words: yes, 2008 Q4 saw a rapid evaporation of booked business, but 2009 is not looking as dire as some expected.
Online Remains a Beacon of Growth
Let’s face it: online media remains a growth area regardless of the fact that growth targets have been reduced. If you are CBS, News Corp., GE’s NBC, Walt Disney, Viacom or Time Warner, you have to look at ways to spruce up your online assets and acquire new ones. If you are Yahoo!, Microsoft, Google, Amazon, Apple, Cisco, Comcast, or IAC, you are looking at online assets as more reasonably priced relative to the previous couple of years.
A couple of companies that remain wild cards are print-based media firms Conde Nast and Hearst, who unlike their newspaper brethren (Tribune, NYT, etc.) are not on the verge of banktrupcy, but whom might fare a similar fate if they don’t take action soon.
This, I believe, is what explains the latest report by JP Morgan analyst Imran Kahn, who (Via Paid Content) in a new report, says:
“Mergers and acquisitions among internet companies could grow significantly. Since most companies cannot look to the economy for growth (JP Morgan estimates GDP will decline 2.2 percent this), Kahn believes healthier internet companies will turn to acquisitions, and that they will target inexpensive smaller internet companies.
Small is Beautiful
I’ve mentioned for some time that microdeals are the wave of the future:
- companies just don’t have the financial wherewithal to go for grand slam deals, and
- integration becomes a nightmare.
Lowered Expectations
Where things get interesting for big media companies is that VCs have been blindsided by their own investors inability to meet capital requirements, so many will accept lesser exits… though truthfully, heavily-funded VC companies are going to get sidelined in the M&A song-and-dance because entrepreneurs might be more realistic whereas VCs will never be able to pull their investments “in the money” when they agreed to nosebleed valuations for some of these bubbly Web 2.0 fares (Digg, Slide, Facebook, Ning, etc.).
Kahn seems to agree:
“Kahn believes healthier internet companies will turn to acquisitions, and that they will target inexpensive smaller internet companies.”
Build vs. Buy
The other variable we’ve touched on Big Media’s Buy vs. Build dilemma for some time:
Large internet companies may re-consider the “build vs. buy” strategy—they’ve been moving recently toward the “build” side of that continuum, which resulted in only 45 acquisitions in 2008 versus 94 in 2007, according to Kahn. While he predicts large internet companies will still increase their R&D spending by 8 percent in 2009, that is much less than the 25 percent increase in 2008. As they spend less on innovation internally, large internet companies will probably be on the hunt for smaller companies.
Balance Sheet vs. Income Statement
This plays into the nuance between balance sheets and income statements. A company’s income statement captures the revenues and costs over a period. Right now: revenues are going down (or at best flat) whereas costs remain high. Yet companies do have cash on their balance sheet, which captures a firm’s assets and liabilities (and shareholder equity) at a given time. In other words, even if companies revenues go down, their cash remains idle. But if revenues are flat or going down, a company cannot justify adding to costs (and thus “building” in house) because this will push the company into a money-losing status, which in a tightening credit market might mean lights out if the company’s financing and credit facilities dry up.
As a result, while cash is king, too much cash on a balance sheet is inefficient.
“Finally, the large internet companies have stockpiled a ton of cash as they grew significantly the past several years, and they will be looking for ways to make a solid return on that money.”
In case you are wondering who is going to be taken out, here are some of Kahn’s picks:
As for which public companies are most likely to be acquired? Kahn evaluated them according to brand strength, product leadership, ease of integrating the smaller company into the larger company, and barriers to entry to determine that Omniture, the online analytics company, and MercadoLibre, the Latin American e-commerce company, are the most likely to be acquired. Shutterfly, The Knot, and Expedia were also attractive candidates, according to the report.
There are a few others I can think of… but we’ll leave that for a separate post.
Well put:
Unlike a lot of men in her position, Ms Bartz kept her power in perspective. She had groomed a successor at Autodesk and became worried that he might leave if she stuck around too long. So she made way for him and became Autodesk’s chairman. “There is a real difference between managing and leading,” she once said. “Managing winds up being the allocation of resources against tasks. Leadership focuses on people. My definition of a leader is someone who helps people succeed.”
Note to self: if ever someone says “Ash we love you too much on our board so we don’t want you working with us”, get out of the way of their nose.
“It’s unclear where Ms. Decker will go next. “She would like being a CEO but there are other things in life she likes, too,” says Warren Buffett, chairman and CEO of Berkshire Hathaway Inc., where Ms. Decker is an outside director. He added that he doesn’t plan to hire her into Berkshire because he likes her work as a board member too much.”
To wrap up the year, we will bring you a 2008 review / 2009 preview for each segment of the new media economy. In today’s Part 1, we look at Video.
I’ve now spent three years trying to develop a business around professionally-produced video content, publishing online, and syndicated across a plethora of destinations. Let me be the first to tell you: it ain’t easy. I was fortunate to burst out of the gates with my own capital, not being distracted by fundraising efforts. I got sidetracked with a frivolous lawsuit, prevailed and then continued to scale video content production, distribution and monetization. I’d 2008 marked the year that WatchMojo.com went from being an expensive hobby to an actual media business. I am actually quite bullish about 2009, let’s see how many unanswered questions will fare.
- Lack of Definitions Hurt Development of Video Advertising Market
This year was not eMarketer’s finest.
First, they come out and admit that their estimates for online video have been outright wrong, and cut them by half.
Then, they revise their figures in a manner that makes no economic sense.
Lastly, it turns out that their definition of online video advertising is in fact incomplete, and as a result, they tend to under-report estimates altogether.
At least, they try. I will give them that.
One of the reasons why online video advertising is a clown industry right now is the lack of consistent definitions and measures. This is why the estimates by the various think-tanks are do wildly different:
- Search vs. Video Similarities
Frequently throughout the year, we’ve heard that video (in 2008) was where search was in the early 2000’s. In other words: a major part of the online media ecosystem looking for a business model. In fact, in February 2008, former Google and CBS executive Patrick Keane said video is where search was in 2002.
I was leaning towards saying that after everything we’ve endured this year, the more accurate statement will be video in 2008 is where search was in 2000. That year, the Nasdaq peaked at 5,000 and within a few months stood at 1,800… going all the way down to 1,200. The dot com bubble burst and search - which was starting to develop a business model with players like GoTo.com pioneering the pay-per-click (aka cost per click, or CPC) - faced a setback, but ultimately it was a mere bump in the grand scheme of things. Look, after all, at the actual, historical growth of online search advertising, wihch charged ahead and grow rapidly during the nuclear winter of 2000-03. The 2003-04 growth in particular is amazing:
The graph above is dated April 2007, the one below November 2008, which takes us deeper into the future.
But, the numbers suggest that Mr. Keane is right, after all, this year, for all intents and purposes, video advertising did what search did in 2002… It took the economy and companies a couple of years to slash costs and get operations back on track. While dark clouds remain in the near future, it can be argued that by Q2/Q3 of 2009, things will start to look fairly better for the broader economy and I’d venture to say that by January 20, 2009, when a new administration is sworn into office, the outlook for the Web in general and online video in particular will be considerably bullish.
- In Search for a Metric: The Yield
However, as the lack of clear definition and precise estimates demonstrate, the video market is considerably embryonic. Moreover, the idea that video will have a precise business model as the search market did is becoming impossible. Search is by nature a very one-dimensional form of advertising: one searches for something and a text ad appears next to organic results. After a year or two, Google acquired Applied Semantics technology and Sprinks’ reach and launched AdSense. The rest is history, as they say, but history will show that search has not changed for at least five years since that product launch.
- Licensing Models
I also see the need to move away from strict advertising revenue share deals and towards licensing deals. I doubt this will necessarily happen next year, but the value of video content is more than simply the revenue generated thereof. When a distribution ingests video from a content site and builds an audience around that, the branding alone and revenue share might not be worthwhile. The challenge for content owners is developing libraries that are worthy of licensing deals. Most, frankly, are not. I’ve listed the reasons why on this blog before.
- Differences
Unlike search, video, conversely, is a wild animal; a multidimensional rich media that offers
- instream ad opportunities: pre/mid/post roll, overlay
- companion display banner ads
- contextual text ads
- sponsorships
- product integration and placement.
How, on earth, can we expect to marry all of these revenue streams into one metric? Well, we must try. I think the new year will eventually bring a new metric, the yield, which will capture all of the revenue that a video generates across the Web.
In fact, much the same way that the IAB standardized ad sizes, I think we will need to standardize a lot in video. Did you know, for example, that some distribution sites only share instream ads while others don’t? These need not be universally standardized across the board, but right now, it is chaotic and serving an impediment to video syndication.
Search and video advertising are very different: the former captures intent, the latter captures interest. This plays out very differently with the kind of advertising that each one draws.
But the greatest difference, really, is the expectations level between search and video. With search, we really didn’t have much expectations. We knew it would be important from a navigation perspective: 7 sites out of 10 are found via search. But the lack of business models pushed search engines towards portaldom, which created the opening - and perfect storm - for Google. Which takes us to the elephant in the room: GooTube.
- Exercise in Domination: YouTube vs. Google
YouTube was launched in 2005, by 2008 it has nearly 40% of the eyeballs in its market. This is a pace of domination that eclipses even Google’s domination in search. What is more impressive is the”stickiness” of the site: on average, a YouTube user will watch 51 videos per site, 5x more than the runner-ups.
YouTube’s origins might have been in UGC, but it has leveraged its “first to scale” status to build a business in premium videos, too.
- Impending Shakedown in UGC File Sharing Video Space
Which takes us to the next point: absolutely expect a shakedown amongst the runner-ups in 2009. In good times, some VCs would have seen a reason to continue to fund these money-losers, but in 2009 - when a VC’s limited partners won’t be returning calls and some VCs will liquidate portfolio companies - don’t expect many to have the stomach to keep covering the losses in the UGC file sharing sites.
- Web to TV
As consumers begin to adjust to the new reality of having to save money and forego conspicuous consumption, they will be drawn to stay at home. Having bought jumbo-sized digital television sets but drawn increasingly to the on-demand nature of the Web, expect a major push from Web to TV, which create the need for professional content.
- Professional Content
NBC Universal’s CEO Jeff Zucker and Discovery Networks David Zaslav have been two of the more vocal doubters of the online media marketplace. Mr. Zucker has been frequently quoted for his “we cannot trade analog dollars for digital pennies” comment and Mr. Zaslav is on record as saying that you won’t be seeing “long form content” from Discovery online because the economic model does not make sense”.
Both men are right, and this is why TV executives suffer from angst and envy. They have seen what happened to their print brethren and for TV it just might be worst because broadband media is a far more dynamic beast than text content. Once the genie is out of the bottle, getting it back in is impossible.
The economic model is scary: TV generates far more revenue than the Web [probably] will.
Why probably? Sure, it’s possible that as media becomes digital and consumers move online, the online advertising market will surpass TV?
Venerable private equity firm VSS says it will by 2011. I projected it to potentially surpass TV by 2021, but the truth is, all this suggests is that I can run some numbers to suggest that. The threat - explaining the angst and envy - is that the Web shrinks the media market and over time all traditional media companies will be looking at smaller businesses. Why else have media moguls fared so poorly this year
Our estimates forecast online advertising to surpass TV advertising by 2021.
Venerable private equity bank Veronis Suhler Stevenson (VSS) projects that to occur by 2011.
Yes, I was being conservative, by the looks of it. But until this happens, no media company will be crazy to fully embrace the Web. This opens a major opportunity for disruptors who create made-for-web programming. The truth is: the vast majority of TV content isn’t good. Over time, the made-for-web producers will share the same kind of hit and miss ratio, with some projects garnering enough backing to up the quality ante. Until then, video consumers online are pleased with the ever-increasing-quality found online.
To estimate the value potential of video content, consider the following pyramid:
In other words,
- the vast volume of video content will be user-generated, so while impressions and streams will be high, the CPM rates will be too low to create meaningful revenues.
- TV companies will have little incentive to publish online, limiting their offerings to promotional material and snippets; so while the CPM rates will be high, the streams will not be high enough to create massive aggregate revenue.
- Made-for-web producers will end up yielding the most revenue, because the CPM rates and the volume of publishing will be high enough.
As such, the winners in the online video space, over time, will not be TV companies, because like print media firms, these will seek to protect their offline business. There is little economic inventive to do so.
- Will VCs Back Video Content?
For two years now, I’ve been saying that VCs would be looking at investing in video content.
- Next Wave of VC Interest in Online Video: Content - August 2007
- Digital media content investments gain momentum - March 2008
- Rise of digital media content funds - April 2008
It failed to materialize to the extent I expected. Meanwhile, online video ads reduced in projections when eMarketer revised downwards its figures for 2008 online video advertising revenues down from $1.35B to a paltry $550M.
Do you see any connection? You should. After all, if UGC was working with marketers, AOL and Yahoo! would not be shutting down their respective UGC service, would they?
Of course, apart from a few exceptions, VCs have taken themselves out of the contest in 2009 because VCs are risk-averse types and 2009 will certainly be too volatile for most VCs to weather.
But those who venture out there will certainly gain.
Here are Predictions for 2009. Enjoy the rest of our series in the days to come:
Tuesday December 23 2008 - Online Advertising
Wednesday December 24 2008 - Social Networking
Thursday December 25 2008 - Venture Capital
Friday December 26 2008 - Mergers & Acquisitions
Saturday December 27 2008 - Search
Sunday December 28 2008 - Digital Music
Monday December 29 2008 - Wireless
Tuesday December 30 2008 - The Economy
Wednesday December 31 2008 - WatchMojo.com 2008 Year in Review and 2009 Preview.
Before all of the social media gurus send me death threats, please note the question mark in the title.
In mid-November 2008, we learned that AOL was canning Uncut, today we hear rumors that Yahoo! is killing Jumpcut. This begs the question: is Microsoft’s Soapbox next? All of these sites were either launched (Soapbox) or acquired (Jumpcut and Uncut) during the heyday of User Generated Content-mania, circa 2006. You know, a time not long ago when Time chose YOU as the Person of the Year.
A mere two years later, with marketers firmly rejecting UGC as a viable environment to advertise alongside to, you have to wonder how many other UGC-oriented video platforms will get killed.
After all, Uncut, Soapbox and Jumpcut are units of major media companies and they’re either dead of risk getting killed off.
How soon before VC-backed video file sharing social networks are killed, as well? After all, when it comes to UG-videos, YouTube has that market cornered, and it’s trying to carve out the ad-friendly programming away from the UGCrap to generate meaningful ad revenues… so how long before me-too video sites realize UGC is for losers and their VCs pull the chord?
Hint: not long.
Rumor has it that MSFT is kicking YHOO’s tires, again, but this time it’s only going after the search component of the business. We know search is key because it accounts for 40% of the only remaining bright spot in advertising, but also because it is seen within MSFT’s walls as a “platform”. From FT, via GigaOm:
“People don’t understand what they’re talking about,” Ballmer told the FT. “At the end of the day, this is about the ad platform. This is not about just any one of the applications.” And for Microsoft, according to the interview, the primary ad platform is search. That makes sense as search is a billion-dollar, proven business.
The rest of Yahoo! is suddenly seen as undesirable, for what I think are two main reasons:
- In the short term (2009), some are calling for a softening of display banner inventory rates, and while video is the fastest growing segment of digital media, it is not as if Yahoo! is necessarily at the forefront of it, YouTube is. This is actually shocking because just a few years ago Yahoo! ruled this space, but I digress.
- More importantly, MSFT made a huge stink about Google’s bid to essentially take over Yahoo!’s search, citing monopoly concerns. As such, MSFT fears that merging MSFT’s and YHOO’s communications platforms - namely email - would give Google something to complain about. Seeing how email is certainly not monetizable, it is not worth the fight.
I personally think the second rationale is smart, in a cautious sort of way. I however think that MSFT needs all the help it can get in online content, portal strategy etc., but who ever listens to me, right?
The Achilles’ heel to this rumored deal, however, is the complexity of the structure. In fact, complex doesn’t even start to cover it:
Under the terms of the proposed transaction, Microsoft would provide a $5 billion facility to the Jon Miller and Ross Levinsohn management team [editor’s note: Mr. Miller ran AOL, Mr. Levinsohn ran FIM]. The duo would raise an additional $5 billion from external investors.
This cash would be used to buy convertible preference shares and warrants which would give it a holding in excess of 30% of Yahoo.
The external investors would also have the right to appoint three of Yahoo’s 11 board directors. The talks with Yahoo involve Microsoft obtaining a 10-year operating agreement to manage the search business. It would also receive a two-year call option to buy the search business for $20 billion. That would leave Yahoo to run its own e-mail, messaging, and content services.
It is expected that the operating agreement would boost Yahoo’s income by as much as $2 billion per annum.
You got that? There’s a quiz next week… I think the world can do without complex financial engineering for a while, don’t you?
Either way, it is worth noting that during his tenure with Fox Interactive Media, Ross Levinsohn orchestrated a deal between News Corp.’s FOXSports.com and MSN which propelled FOX Sports to the upper echelon of sports sites and gave him a lay of land within MSFT’s online division. Does this matter? Sure, why not. It does not hurt.
It also does not hurt that his confrere Jon Miller ran AOL, which sooner or later will merge with Yahoo! I figure down the road when the massive consolidation takes place, it’s highly possible that AOL, Yahoo! will both be units underneath MSFT… and one reason will be Google’s aversion to owning content whereas MSFT has grudgingly dipped its toes in content (Slate.com before it sold it to Washington Post, to name one, but also all of the content on MSN.com, to list other examples).
Ultimately, I really think that when push comes to shove, if MSFT is willing to pay $20B for search (I cannot stress this enough: this is merely a rumor still), then why not pay $25B for the whole kit and kaboodle? It won’t be $44.6B, that is for sure. I should disclose that I owned Yahoo! shares when MSFT first made a bid for YHOO but then sold them at $29 when it became clear that YHOO’s then CEO Jerry Yang would torpedo the deal at any cost. No, really, any cost, try $25B or so, which is the value between Yahoo!’s market cap when he resigned this month and the buyout price MSFT offered.
But the main reason why this will perhaps end in a buyout is that the financial markets remain somewhat frozen and raising $5B won’t be easy (for Levinsohn and Miller). It is easier for MSFT to write a big check than wait for a third party to raise $5B to go along with MSFT’s own $5B… so this might be just one move by MSFT to make it seem like they really don’t want all of Yahoo!, and when no one else will be able to match their capital, they will “be swayed” to sign a check for the whole thing themselves.
Just my two cents.
Rupert Murdoch is attacking NYT not by a hostile takeover (not sure the Feds will allow it, though admittedly the Feds are busy with trying to save the dying vestiges of capitalism) or even by trying to win over subscribers, he’s poaching advertisers.
Microsoft, meanwhile, is “over” with trying to acquire Yahoo!, so it is now poaching its employees, Yahoo’s VP of Search Technology Sean Suchter just left Sunneyvale for Redmond.
This is a new, old kind of warfare, I think, and it reminds me a lot of General Electric’s chairman, John F. Welch Jr., who earned the nickname Neutron Jack on his reputation for eliminating people while leaving building intact. In this case, the attacking party leaves the company intact but strikes at the core of the asset: in NYT’s case (a print media company) it’s the advertisers and in Yahoo!’s case (a #2 in search), it’s the brains behind… the algorithm and unit organization.
PLAY
