Murdoch on Microhoo: 'I'm mystified'

CARLSBAD, Calif.--Rupert Murdoch, who is no stranger to the Microsoft-Yahoo affair, said even he is shaking his head at the lack of a deal.

"I'm mystified," Murdoch said. "I cannot understand the whole thing. Jerry Yang is a friend who we all love and admire and he's emotional about it."

Murdoch said that Microsoft offered a price that the vast majority of shareholders wanted but that Yang managed, at least for now, to fend them off. At the same, time, he said he's surprised Microsoft didn't press the point, something he said comes from their lack of mega-deal experience.

"They're not used to big deals, to buying big things," Murdoch said.

Murdoch said if he were Microsoft, he would have put the offer out there and let shareholders do the work for them. "You aim the gun. You decide to fire the gun. You've just got to sit and wait. It will come to you."

He is dubious, though, that a Microsoft-Yahoo deal isn't a merger that will actually come to fruition. "I think that will be rejected by the board, by everybody."

Murdoch also put in his two cents about whether Yahoo deals should be held up by regulators. "It would be very sad," he said. "Google is so good. (The have the) best search engine by far. They are just going on, getting bigger and bigger. It is just gushing money. You can see why Microsoft is worried."

On Carl Icahn's move, he said, "That's not serious. He wants to make a couple hundred million dollars for himself."

The noise helps Microsoft's cause, he said, but as for the actual proxy threat, he said, "If I were a Yahoo director, I wouldn't be worried about that."

Although Murdoch himself was once a player in a potential joint venture that would combine Microsoft, Yahoo, and Fox's MySpace assets, he said that deal appears to be off the table.

Murdoch also addressed plenty of other topics.

On Hulu: "We wanted to control our copyrights and we thought this would be a pretty good way of doing it."

On Google's gripes about social-networking advertising: "They shouldn't be griping," he said. "They said they never expected to make that money the first year."

That said, "we want them, whatever happens, not to lose money at least on the third year," Murdoch said. He also praised them as "great partners."

"We love them," he said. "I think they are the greatest company in America."

He did say that the public does want choice: "You don't want anybody to be a monopoly and own everything."

On Yahoo: They made a fatal mistake. They bought Overture and sat on it for two years. "They have a huge job a head of them to hold onto their 20 percent, let alone to grow it. I wish them a lot of luck."

On Microsoft's search ambitions: "How can they build on their 8 or 9 percent? God knows. I'm not an expert, but this doesn't appear to be their expertise."

Asked about Fox News, Murdoch responded that broadcaster, like Brit Hume, have both sides represented on their shows.

Conference co-host Walt Mossberg responds: "He has both sides on, but he kicks the crap out of one of them."

Click here for full coverage of the D: All Things Digital conference.

[patrick_i]

I feel for Jerry Yang. This is his baby. He has a responsibility to the stockholders definitely but why does it seem that Wall Street is always willing to suck the last few drops of blood from a baby for a few pennys. Maybe he's looking long term.. which is what I think we need more of these days.

[dascha1]

Out with the bad, in with the good they say. Why doesn't Coors jump on the bandwagon? They seem to be focusing on social marketing in other spaces according to Wall Street.

[OlsonBW]

The reason it hasn't gone anywhere is that Microsoft KNOWS that buying Yahoo won't help them one bit.

For the same reasons that Microsoft has poured tons of money into projects that have not been successful, the Yahoo merger won't be either.

The reason is that Microsoft does not know how to compete or make a compelling project IF THEY CANNOT BLOCK DISTRIBUTION CHANNELS.

Sorry to yell, but that is the only way that Microsoft can compete until management (Steve Ballmer) is replaced with a LEADER that truly knows how to lead and not just scream at people and throw chairs.

[open-mind]

Microsoft should just fall back on their tried-and-true recipe...



Make Windows Live the default search experience in IE with no option to change it. Also tweak IE so that Google's site works like crap. Granted this may be considered illegal, but fortunately for Microsoft, the justice system takes forever, and when they are found guilty nothing really happens.