Yahoo! Inc. (NASDAQ: YHOO) shares fell below the $20 mark in early trading on Tuesday and are approaching the stock's closing price of $19.18 reached on Jan. 31. That's the session before Microsoft Corp. (NASDAQ: MSFT) publicly came out with its $31 a share, $44.6 billion offer to acquire Yahoo! in a saga that is now in its sixth month.
The $20 threshold is significant, if mostly psychologically. Many analysts expected Yahoo! shares to find support ahead of that level on speculation that such a price makes the company vulnerable to another acquisition offer from a strategic or financial buyer. Yahoo! was in an "anyone-but-Microsoft" mode after the original offer and reportedly had talks with the likes of News Corp. (NYSE: NWS) and Time-Warner Inc. (NYSE: TWX), whcih could be interested in some kind of deal now that Yahoo! is cheaper. Indeed, there's talk Yahoo! may already be looking to revive talks with Time Warner-owned AOL L about combining the operations.
It didn't have to be this way. Had Yahoo! negotiated with Microsoft rather than fighting a deal at all costs, shareholders wouldn't be looking at a stock that is now 40% below Microsoft's reported last offer of $33 a share.
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.
The news that Microsoft (NASDAQ: MSFT) would not raise its bid for Yahoo! (NASDAQ: YHOO) came as enough of a surprise that it made the front page of some papers. Microsoft managers "argue that Yahoo's recent roadshow failed to dazzle investors and nothing in its presentations will justify a higher price," according to The Wall Street Journal . For good reason. The projections were absurd, especially given current economic conditions.
Microsoft understands full well that it has Yahoo! in a corner and that there is no need to be generous. Yahoo!'s shares traded at $19 just two weeks before the buy-out letter. That means if it walks away, its stock could go down by a third. Its board is not going to stand by and be sued by large institutional shareholders.
Yahoo! has shopped itself aggressively to News Corp (NYSE: NWS) and Time Warner (NYSE: TWX). Given that Mr. Murdoch is known as a man who never saw a risk he did not like, the fact that he made no bid speaks volumes.
Yahoo! Inc. (NASDAQ: YHOO) may end up kicking and screaming on its way to the altar, but still appears headed toward a marriage with Microsoft Corp. (NASDAQ: MSFT).
The latest fling -- which involved rumors this week that Yahoo! was courting News Corp. (NYSE: NWS) in a complicated alliance that also featured private equity involvement -- was shot down in the market almost as soon as it was floated. In the deal, News Corp. would reportedly get a 20% stake in Yahoo! while handing off its MySpace social networking property to Yahoo!
For such a deal to fly, however, Yahoo! managers would have to show its value tops Microsoft's current $31 a share, $44.6 billion offer, or risk a revolt from shareholders and years in the courtroom defending their actions.
Google (NASDAQ:GOOG) always had a problem trying to keep Yahoo! (NASDAQ:YHOO) out of the hands of Microsoft (NASDAQ:MSFT). The No.1 and No.2 search engine firms would have had 80% of the US market if Google took over the function for both companies. As The Wall Street Journalwrites, the deal was dead from the start because of "concerns about the intense regulatory scrutiny it could attract, given Google's and Yahoo's significant shares of the Web-search and online-advertising markets,"
There are ongoing rumors that News Corp (NYSE:NWS) and Time Warner (NYSE:TWX) may have an interest with linking up with Yahoo!. If the portal really wants to stay independent, either deal could make sense. Yahoo! could extend its search function over the NWS MySpace property, which is now one of the five most visited sites in the world, or over AOL, which is also in the top five. This could, in effect, move Yahoo!'s search engine share from the 20% range to closer to 30%. That would still be well short of Google which is around the 55% level.
The Canadian group Thomson is paying some £7.9 billion, or more than $15 billion in US dollars to acquire UK-based Reuters. This does still leave questions about the combined branding of both services' "consensus estimates" such as First Call and others. The FT also noted that the news and media companies "may have to offer staffing or other support to ensure that the competitors could use the data to start a rival service with little or no delay." Based on a scrolling newswire world, that would only be expected.
After Rupert Murdoch's News Corp. (NYSE: NWS) was allowed to acquire Dow Jones, much of these concerns here should have already been put to rest. This will make for 3 dominant players if you include Bloomberg in there in live financial news rather than 4 dominant players, and will leave a small portion of the rest for the hundreds of smaller players.
I have spoken with personal contacts inside of both of these companies merging (and with Dow Jones entities prior to the Murdoch buyout), and they have all noted over and over that this merger will close. Sometimes regulators have to make deep investigations and throw up flags just so the public realizes they are there. Jon Ogg is an editor and partner of 247WallSt.com.
News Corp. (NYSE: NWS) said it will sell Salt Lake City-based KSTU Channel 13 and seven other Fox-affiliated televisions stations to Oak Hill Capital Partners for $1.1 billion, the Associated Press reported Wednesday via AOL. In May 2007, Oak Hill purchased nine television stations from The New York Times Co. (NYSE: NYT) for $575 million.
News Corps' (NYSE: NWS) shares gained 5 cents to $21.47 on the news in Wednesday morning trading.
Alan Daniak of Anderson & Associates told BloggingStocks Wednesday that the deal should help rebuild News Corp.'s cash component, following the purchase of Dow Jones.
"It's a significant cash infusion for News Corp. KSTU was a strong revenue holding but News Corp. could benefit from the added cash after the Dow Jones deal, so it makes considerable sense," Daniak said. "And the deal also speaks to the fact the News Corp. is committed to selling lower-profile, smaller affiliate stations to concentrate on core markets."
Earlier this year News Corp. agreed to buy Dow Jones, including The Wall Street Journal, for $5.2 billion.
Mysterious is the mind of media tycoon Rupert Murdoch. Now comes word that the News Corp (NYSE: NWS) CEO considered making a bid for The New York Times Company (NYSE: NYT). Exactly how long the mogul entertained such a notion isn't clear. Of course, he eventually went after Wall Street Journal parent Dow Jones & Co. (NYSE: DJ).
Can you imagine a New York Times owned by Murdoch? Frank Rich, Thomas Friedman, Paul Krugman, and Maureen Dowd probably couldn't either. I am sure the four of them would have screamed bloody murder at the thought of working for Murdoch. New York Times Chairman Arthur Sulzberger, whose family has a iron-clad grip on the publisher, would never sell. But Murdoch, who sees The Times as a symbol of all that's bad and liberal about the media, knows all of these and many other reasons why he will never own the Grey Lady. So, why would he waste his time with such a ludicrous idea? I have no idea but dealbook.blogs.nytimes.com/2007/11/15/did-murdoch-mull-a-times-offer/, The Times' business blog, has a novel theory.
"it's possible that the crafty media baron is playing games with the paper he wishes to destroy." the site says.
Sumner Redstone, Viacom Inc. (NYSE: VIA) Chairman, has reportedly forced his daughter Shari off its board. And Dealbook reports that with Shari gone, the chance of keeping Viacom in the family has evaporated.
Sumner Redstone, 84, is nothing if not a survivor. Back before he owned Viacom and CBS Corp. (NYSE: CBS), in 1979, he found himself in room 341 of Boston's Copley Plaza Hotel when the place caught fire. So Redstone climbed out on the ledge and held on with one arm while severe burns covered nearly half his body. The gnarled claw of that hand is a testament to his survival instincts.
But Redstone has also managed to alienate his family. He divorced his long-time wife Phyllis a few years ago -- she alleged he was fooling around with the much younger ex-wife of former hairdresser and now producer, John Peters. And his son Brett sued him arguing that Sumner and Shari forced Brett off the board of their privately-held movie theater chain, National Amusements. But the chance for keeping Viacom in the family looked good when he appointed his daughter Shari to the Viacom board.
I don't know why they had a falling out -- possibly disagreements over National Amusements about whether to spin-it off (Sumner) or invest further in it (Shari) -- but with Shari rumored to be on her way out, there are many media companies that would love to own Viacom. News Corp (NYSE: NWS), General Electric Co.'s (NYSE: GE) NBC Universal, The Walt Disney Company (NYSE: DIS) and Time Warner Inc. (NYSE: TWX), owner of this blog, all come to mind as possible suitors.
With Viacom up 3% on the news, let the bidding begin!
Peter Cohan is president ofPeter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns General Electric stock, has consulted to News Corp.'s chairman, and has no financial interest in the other securities mentioned in this post.
Rupert Murdoch said at Allen & Company's annual media retreat that he is getting a little bit tired of waiting for the Bancroft family that runs Dow Jones (NYSE: DJ) to make up their minds about his $60 a share bid.
Murdoch was quoted in the New York Times as saying: "They keep changing their minds."
Press reports have Dow Jones to talking to billionaire Ron Burkle about a potential competing bid to Murdoch. It is hard to imagine that Burkle or any other "non-media" entity will be able to raise $5 billion in a short time to buy Dow Jones. A number of analysts have pointed out that the price is probably above what can rationally be supported by Dow Jones earnings.
But Murdoch controls News Corp (NYSE: NWS), the entity that would buy Dow Jones, and he believes that he can make money by combining the business publisher with properties like his new Fox Business channel which will launch in October.
If Murdoch decides to walk away, and he may, Dow Jones shareholders will be left with a $30 stock and very little prospect that it will go higher.
Posted Jun 27th 2007 9:00AM by Tom Taulli Filed under: Deals
According to a recent story in The Wall Street Journal, it appears that Dow Jones (NASDAQ: DJ) and News Corp (NYSE: NWS) have an agreement in principal on editorial control and protection. While deals can always fall apart, this is definitely a good sign. Rupert Murdoch is willing to write a check for $5 billion and he has desperately pursued the company. In a way, it could be his crowning achievement.
I'm a big fan of the Wall Street Journal and really can't live without it. And the focus on editorial issues probably helps Murdoch. But I still think the valuation is crazy. Even if there are lots of synergies, I can't find a payback. Even potential suitors like GE (NYSE: GE) think the price is just too high.
Basically, it seems that Dow Jones is a trophy asset. At the same time, Murdoch is a genius when it comes to strategic plays. His MySpace deal has turned out to be a brilliant move. And it's no accident. His career has been testament to skilled deal-making. Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
Pearson Plc. (NYSE: PSO) is reportedly interested in making a bid for Dow Jones & Co. (NYSE: DJ) to counter the $5 billion unsolicited offer from Rupert Murdoch's News Corp (NYSE: NWS). The problem is that the U.K. company can't beat Murdoch on its own and will have difficulty finding partners willing to take on the Australian media mogul.
The Wall Street Journal says that the owner of the Financial Times has been trying in recent weeks to recruit partners to pursue a bid for Dow Jones though a formal offer is a "long shot." General Electric Co. (NYSE: GE)'s NBC Universal has rebuffed Pearson, which also approached Hearst Corp., the paper said.
Since nothing has actually happened yet, the question arises about who leaked the story. Was it the Bancrofts, who control Dow Jones, trying to find a white knight to rescue them from the evil Murdoch? Maybe it was a Pearson banker or a banker from one of the companies that was approached by the publisher.
Could it happen? Could News Corp (NYSE: NWS) pull its offer? It could, and the fear is absolutely there. That's why the stock has fallen. For one, the Bancroft family, which controls the majority of Dow Jones' shares, hasn't formally accepted Rupert Murdoch's $5 billion, $60 a share offer. And no one else has come forward with a competing bid. But it does seem that both sides are moving together in the same direction. Okay, but somebody should make up their mind -- either way -- and stop fiddling around.
Barry Diller is back at it. The chairman and CEO of IAC/InteractiveCorp, who is also chairman of the board and a senior advisor to Expedia, is working to take online travel firm private at $30 a share. Part of any deal will involve Expedia's TripAdvisor being spun off, with about 400 jobs being lost in that shuffle.
After many, many laps around the track, this race is over, as race track and casino operator Penn agreed to be acquired today by Fortress Investment Group LLC (NYSE: FIG) and private equity firm Centerbridge Partners. All cash, baby, in a deal worth $8.9 billion that includes $2.8 billion of assumed debt. Everyone to the Winner's Circle.
If there is a bidding war for Dow Jones & Co. (NYSE: DJ), Rupert Murdoch's lust for power will trump the desire for profits from private equity players such as Blackstone Group LP, Texas Pacific Group or KKR, or any other potential bidders.
Shares of the New York-based financial information company have already soared past the insanely high unsolicited $60 per share offer the CEO of News Corp (NYSE: NWS) has made. Murdoch, though, has coveted The Wall Street Journal for years and would be willing to pay an even steeper price to turn his dream into reality. It wouldn't be a stretch for Murdoch to bid $65 or $70 to snap up Dow Jones.
Other potential buyers view Dow Jones as just a business while Murdoch is most interested in the company's ability to influence the public heading into a presidential election. He is an uneconomical bidder who doesn't mind if some of his media properties lose a little money provided that they further his political agenda.
To be sure, there are some sound economic reasons for a merger between Dow Jones and News Corp. The Journal could certainly give a boost to the nascent Fox business news channel. Though Dow Jones has gotten better under CEO Rich Zannino, the company was mismanaged for years, so there are no doubt still cost savings to be had.
But many questions are yet to be answered.
Would Murdoch -- who has vowed not to interfere with the Journal's news coverage -- keep that promise for other Dow Jones properties? What would become of MarketWatch, Barron's and Dow Jones Newswires? Would WSJ.com remain a subscription service?
Posted May 31st 2007 3:15PM by Tom Barlow Filed under: Deals
MySpace, owned by News Corp (NYSE: NWS)'s Fox Interactive Media, has become the largest social networking spot on the internet, and the company is taking steps to keep it that way by purchasing the photo-sharing site Photobucket for a reported $250-300 million.
Up until now, in order for MySpace users to embed photos and videos into their space, they had to first post that content on outside sites such as Photobucket and YouTube, then embed links to it. Photobucket holds a dominant share of that photo-sharing market (41%) and over 40% of the links to its content comes from MySpace users.
A couple of weeks ago, Fox Interactive Media (FIM) began to block content from Photobucket, accusing it of encouraging MySpace users to embed Photobucket-hosted content that carried an accompanying advertisement. If this was a negotiating tactic, it didn't seem to drive the price down much; News Corp is rumored to have dropped $250-300 million for the site.
The move will allow FIM to keep MySpace customers within the family fold as they upload content, thus avoiding the possibility that while on the Photobucket site they might be lured to try a competitor to MySpace.
FIM also announced a smaller deal to buy Flektor, a site that allows users to prep better user content by editing and mashing up their photos and videos.
While their initial plan is to maintain separate identities for the companies, I'd expect FIM to eventually fold both companies into the MySpace family to create a seamless one-stop shop. It also now has the opportunity to market MySpace to the reported 30 million people that visited Photobucket in March.
While the price paid seems steep, the race to integration has become a sprint, and all the big rollers have bought into the game. It's not a market for the thin of wallet or faint of heart.
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Yahoo! Inc. (NASDAQ: YHOO) shares fell below the $20 mark in early trading on Tuesday and are approaching the stock's closing price of $19.18 reached on Jan. 31. That's the session before Microsoft Corp. (NASDAQ: MSFT) publicly came out with its $31 a share, $44.6 billion offer to acquire Yahoo! in a saga that is now in its sixth month.
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