A little pre-holiday humor from Henry Blodget – Yahoo, Microsoft, Time Warner, News Corp, and AOL Agree To Talk Forever And Never Do Anything:
All major Internet companies not named Google are in talks about mergers, partnerships, spinouts, and other proposals to quiet irate shareholders and stop getting their butts kicked, says the WSJ. No news on when they finally plan to stop talking and actually do something.
Those of us of sufficient antiquity can remember a time in the early 90′s when one could have said something quite similar:
All major PC software companies not named Microsoft are in talks about mergers, partnerships, spinouts, and other proposals to quiet irate shareholders and stop getting their butts kicked. No news on when they finally plan to stop talking and actually do something.
Of course, all the corporate couplings and reorganizations did no good for Microsoft’s competitors then and I don’t expect them to do much for Google’s competitors now. Blodget’s suggestion is that Yahoo skip the palaver and concentrate on straightening out their business which seems eminently sensible, but increasingly unlikely due to all the distractions for both management and staff.
Just when the plot in the Microsoft Yahoo acquisition soap opera was getting a bit stale, some new twists were added today leading off with Yahoo announcing that they would be stepping out with Google for a two week trial run of Google ads on Yahoo search. The Google ads are only supposed to appear on 3% of Yahoo’s US search queries during the trial, but this solution has been advanced before as a way for Yahoo to leapfrog the problems with its troubled search ad infrastructure and make some real money off the Yahoo search gold mine. Needless to say, wannabe suitor Microsoft was displeased to hear that Yahoo was still playing the field and raised fears of a monopoly without actually using the “m” word.
Then to add insult to injury, word leaked out that Yahoo is pursuing nuptials with Time Warner’s AOL unit:
Under the terms being discussed between Yahoo and Time Warner, the latter would fold its AOL unit into Yahoo and make a cash investment in return for about 20% of the combined entity, people familiar with the situation said. The deal, which wouldn’t include AOL’s dial-up access business, would value AOL at about $10 billion. As part of the deal, Yahoo would use the Time Warner cash and additional funds to buy back several billion dollars worth of its own stock at a price somewhere in the middle of the range between $30 and $40 a share, the people said.
You may recall that Google owns 5% of AOL and handles their search ad business so Yahoo acquiring AOL and running Google ads would create a surprisingly homogeneous “content” and search company although not obviously a wildly profitable one.
Still, it’s all up to the Yahoo shareholders and which way they jump will mostly be determined by how much money they get upfront and not in some halcyon future. In that regard, Microsoft is rumored to be in talks with Rupert Murdoch’s News Corp. about merging MSN, Yahoo, and MySpace presumably with the objective of having News Corp. help Microsoft offer more for Yahoo. Since Google has the MySpace search ad contract and Microsoft owns part of MySpace competitor Facebook, such a plan would provide even more fireworks.
Stay tuned – there’s apparently life in this plot yet.
It’s been a busy news week for the folks at Google and everything they do seems to cramp Microsoft’s style. First up was the leak on Tuesday (and announcement today) of the OpenSocial Web API for social networking applications. The idea is to have a common standard for developers so that they don’t have to start from scratch with each social network they support.
So what’s the Microsoft hook? In the words of Marc Andreesson:
News Corporation and NBC Universal will launch the largest Internet video distribution network ever assembled with the most sought-after content from television and film, it was announced today by Jeff Zucker, President and Chief Executive Officer, NBC Universal and Peter Chernin, President and Chief Operating Officer, News Corporation. The video-rich site will debut this summer with thousands of hours of full-length programming, movies and clips, representing premium content from at least a dozen networks and two major film studios.
AOL, MSN, MySpace and Yahoo! will be the new site’s initial distribution partners. Their users, who represent 96 percent of the monthly U.S. unique users on the Internet, will have unlimited access to the site’s vast library of content. This media alliance will offer consumers free long- and short-form video and create a compelling platform for advertisers, targeting the rapidly growing audience of online video consumers. Charter advertisers include Cadbury Schweppes, Cisco, Esurance, Intel and General Motors.
At launch, full episodes and clips from current hit shows, including Heroes, 24, House, My Name Is Earl, Saturday Night Live, Friday Night Lights, The Riches, 30 Rock, The Simpsons, The Tonight Show, Prison Break, Are You Smarter than a 5th Grader and Top Chef, plus hits from the studios’ vast television libraries, will be available free, on an ad-supported basis, within a rich consumer experience featuring personalized video playlists, mashups, online communities and video search. Plus, the extensive programming lineup will include fan favorite films like Borat, Little Miss Sunshine, Devil Wears Prada, The Bourne Identity and Bourne Supremacy with bonus materials and movie trailers. Post-launch, plans will be considered for acquiring additional content as well as producing and licensing original programming for the new site’s audience.
Its launch distribution partners will provide the biggest potential reach of any player on the Internet. Moreover, the new site will actively seek agreements with a variety of additional distribution partners.
“This partnership is completely aligned with our continued investment in video on MSN and will allow hundreds of millions of our consumers to tune into a vast library of high-quality, safe and legal online video,” said Kevin Johnson, President, Platform and Services Division, Microsoft. “Our alliance proves that you can deliver quality online video entertainment and protect intellectual property and copyright at the same time. We look forward to working together to explore additional opportunities to distribute this content across other Microsoft services and devices.”
YouTube isn’t mentioned by name in the press release, but you don’t need a weatherman to know which way the wind blows.
Aside from the fact that it seems more about distribution than about network, the real question is how much YouTube will be hurt by the loss of commercial video in the face of its continued dominance in displaying the amateur variety. Of course, YouTube would be invited to join the network in less than a New York minute if they agreed to the media companies’ revenue sharing terms.
Update: Kevin Johnson’s formal statement is here. Best line:
Today’s announcement is a great win for MSN’s more than 460 million consumers and for online video more broadly.
Golly, such a deal!