Yahoo and News Corp – Sounds Like a Match Made in Heaven

Implications: There is something funny about this whole situation.  Yahoo is peddling itself around corporate America because it does not want Microsoft as an owner or partner.  I would go further but it would be inappropriate but funny. With all of the public clamoring about Yahoo, Jerry Yang is having a heck of a time trying to have a serious business discussion with anyone.  The poor man cannot make a move without a reporter or analyst breathing down his neck like a pack of hungry dogs.

Analysis: They say the odds of Microsoft winning its bid for Yahoo may be improving.  I disagree.  Microsoft will be forced to get approval from major regulatory bodies around the world.  That alone can take 2 years for the approval process. Frankly you need to question the value of a Yahoo relationship at $42.1 Billion dollars and years of regulatory fighting.

Microsoft stands a good chance for its bid only if Yahoo continues a downward slide in the stock market.  With a weakened company regulatory bodies are less likely to consider a Microsoft and Yahoo relationship threatening to their respective national markets.

A News Corp relationship is interesting and even strategic for Yahoo.  A Yahoo relationship with Google will definitely running into regulatory stonewalls.  The only way a Google deal will happen is if Yahoo’s stock craters.

Yes, I agree that Yahoo could be simply “negotiating” with Microsoft by forcing it to raise its offering price.  However, with all of the media Yahoo’s actions are getting it looks like Yahoo is desperately seeking a suitor.  In fact Yahoo is beginning to look like it’s a screaming child looking for attention.

Yahoo investors need to think about the content aspect of any deal.  Yahoo can best facilitate News Corp’s content distribution dreams while News Corp can best facilitate Yahoo’s dream of acquiring content.

As for people who all claim to be close the various potential suitors, it has now reached comical proportions.  Everyone knows a “source close to the deal or to the suitor” is a deliberate news leak or spin-doctoring.

Deliberate news leaks and spin-doctoring aside, Yahoo investors need to focus on what will bring them the best long term bang for their dollar.  A relationship with Microsoft will clearly help Microsoft who has comparatively little online presence.  I am unsure of how Microsoft can help Yahoo except in the way of cash.  However, a relationship with News Corp is strategic.

News Corp. has online presence and is a content company.  It is the strategic nature of a News Corp relationship that needs to be seriously considered.