Following this Yahoo! Inc. (NASDAQ: YHOO) affair is like playing a very high-stakes game of Three Card Monte: Take your eyes off the lucky lady and, pfffft, you're cooked.
As paidContent reported yesterday and the Wall Street Journal confirmed this morning, Time Warner Inc. (NYSE: TWX) is talking with the Internet company about shipping AOL and a trunk full of cash to Yahoo! in exchange for a minority stake in the combined company and a chance to close the door on one of the dumbest mergers in recent memory. AOL would get a lifeline. Beyond escaping Microsoft Corp.'s (NASDAQ: MSFT) $42 billion headlock, in AOL Yahoo! would get what remains a premier player in internet advertising and a company that retains large online audiences for financial, entertainment and other content.
The hardest thing to figure here is what's happening on the other side of the deal, where Microsoft is reportedly lining up News Corp. (NYSE: NWS) for a joint bid for Yahoo!. Under that scenario, Yahoo! would be folded in with Microsoft's MSN portal and News Corp.'s MySpace unit in one mighty online ad-selling, application-bundling, social networking-ing company. That Microsoft CEO Steve Ballmer is thinking of climbing into business with News Corp.'s Rupert Murdoch (pictured) suggests just how worried the software giant is about losing Yahoo!. But Ballmer should think twice. Murdoch has a famously keen instinct for when to buy, sell or hold a business. His interest in unloading MySpace underscores that, with the rise of FaceBook and other social networks, the Web property's best days might be behind it.
