Yahoo and AOL: Like Two Louts Merging to Make One Cretin
by John Paczkowski
Posted on September 24, 2008 at 7:40 AM PT
Looks like Carl Icahn did show up to his first Yahoo board meeting, though it appears he wasn’t able to get much done. The new board, which also includes former Viacom CEO Frank Biondi and former CEO of Nextel Partners (S), John Chapple, reportedly met Tuesday and decided as a first course of business to talk to Time Warner about the future of its AOL division. Odd, since Boomtown reported earlier this week that the company has already been been doing just that, and the talks “are more serious than has been reported.” In fact, there’s even a price being bandied about: more than $5 billion, but less than $8 billion. Time Warner is said to be angling for $10 billion.
So perhaps this means that those talks are about to become more serious still. Time Warner (TWX) CEO Jeff Bewkes did say earlier this month that AOL’s future “will probably get decided fairly soon.”
And if it does and the company is able to ditch AOL on Yahoo? Well, as I’ve said before, Yahoo (YHOO) will no doubt spin such a combination as one that would bolster its domestic market position. But rather than a synergistic powerhouse, a merger of these companies is more like two louts coming together to make one cretin. Not exactly a proven formula, considering recent history. AOL+Compuserve = FAIL. AOL+Netscape = FAIL. AOL+Time Warner = FAIL. AOL+Yahoo?
Comments
I agree that the past mergers involving AOL have not worked, however they involved AOL as an ISP vs online content and ads. Yahoo clearly sees its future as a “media” content hub instead of a search entity. It is possible this merger could create a online media/news powerhouse. They are both leaders in display ads as well. I know display ads have received a bad rap lately, but many innovations involving rich media are bolstering display ads. From an advertising perspective, display ads hold a lot more opportunity than search, assuming they start generating clicks. If this happens they would hold a distinct advantage over Google in online advertising. Do you see an AOL/Yahoo success as they evolve into content providers?
Posted by Dominic Pannone at September 24th, 2008 at 8:45 amI said on another blog here at All Things Digital, if Yahoo buys AOL, it is the blind buying the stupid.
Yahoo is blind, good revenues are wasted on all of the free stuff they do, like MyYahoo, Yahoo Mail, constantly in beta, constantly costing for coders.
AOL was stupid. They were coining so much money on dial up they never developed a broadband strategy. AOL was like a very glorified bulletin board, tons of content, forums, etc. When we got real ISP’s like localize cable an DSL, they were D.O.A.
Posted by Richard Mitnick at September 24th, 2008 at 10:49 amI may have to use that in a headline, Richard.
Posted by John Paczkowski at September 24th, 2008 at 11:41 amYahoo was always a “media hub” ever since day 1. It has never been a “search engine”
Yahoo has always (until recently) licensed its search technology from others, Inktomi, AltaVista, Google.
Posted by Sam Harrison at September 24th, 2008 at 12:12 pmI agree with Dominic Pannone. AOL has spread out it’s content to the masses. Not really an ISP anymore.
As far as dial-up vs. broadband Richard talks about…I think the cable/phone companies sent a blank check to Washington 8 years ago to prevent AOL from running RoadRunner broadband. Time Warner could have easily combined RR with AOL, but AOL was never allowed to flat out offer broadband.
Instead, those companies that screamed monopoly are now the ones sending you bills for Phone/TV/Internet….Go Figure.
Posted by Jack Manley at September 24th, 2008 at 1:46 pm