Report: Yahoo-AOL deal possible this month

A Yahoo acquisition of AOL could happen as early as this month, TechCrunch reported Monday, citing sources close to the negotiations.

"It's rumors and speculation, which we don't comment on," Yahoo spokesman Brad Williams said. Update 2:30 p.m. PDT: AOL also declined to comment.

According to the report, Yahoo would buy AOL's content business, but not its dial-up subscription business. Time Warner had separated the two, and given Yahoo's online-publishing and advertising interests, it would be no surprise to see Yahoo pass over that dwindling asset.

The possibility grew out of Microsoft's unwelcome attempt to acquire Yahoo, but some would be surprised to see any deal at all. In a note on Monday, Sanford C. Bernstein analysts said the deal is unlikely for three reasons:

• Stock transactions over $3.4 billion are dilutive to Yahoo. We think Time Warner was hoping for $6 billion to $8 billion, which is only possible with synergies.

• The primary source of synergies is staff reductions, where Yahoo has (an) unimpressive track record. Other benefits, such as pricing power in display and combining Advertising.com with Right Media Exchange, will not drive short-term incremental revenues.

• Regulators might not allow the AOL-Google paid-search deal to pass to Yahoo, which would wipe out the other synergies--creating a large risk for both sides.

[i_made_this]

It's all idle chat. This would be a deal made morons, but that wouldn't really matter. The DOC would finally have grounds to bust them both directly, and hold Google liable indirectly. No way even the business management morons leading both Yahoo and AOL will be allowed to let it go through by Google plus the DOC - an unusual pair of bedmates, agreed.

Google will win, with or without this deal going through. AOL is now as they've been for years Google's single biggest source of search revenue. AOL will not leave Google as their custom Search Engine builder.

I've said nothing about tech expertise at either Yahoo or AOL. I've call their managements desperate morons, and that's all.

[tcardone05]

Coming from TechCrunch, it's probably just another digg-being-bought-oh-wait-its-not story. Stephen's Bernstein source is much more compelling against the merger/buyout than its likely to happen. however, AOL doesn't have a good track record for teaming up with good partnerships, and it would likely mark the end of the Yahoo! era such as the case with Netscape.

[JonathanVV]

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