Is Rupert really interested in Yahoo?
The author has questioned the potential News Corp and Yahoo deal on three points. First, he says, because Yahoo and News Corp. would have to convince Yahoo shareholders that the abstract deal is worth more than the cold hard cash Microsoft is offering. Convincing Yahoo shareholders to embrace a MySpace deal would be difficult enough, because it would assume that MySpace is worth billions of dollars. According to The Wall Street Journal, News Corp. would likely push for a valuation between $6 billion and $10 billion. But then for a harsh fact that much of MySpace’s revenue comes from its $900 million advertising deal with Google , in which the online giant has agreed to pay about $20 million per month until mid-2010. So far, that deal doesn’t seem to be working out so well for Google. In its most recent conference call with analysts, Google blamed its disappointing performance in part on its inability to make the MySpace deal pay off as quickly as it would like. That makes it doubtful that MySpace is really worth billions today. And if investors don’t believe in the value of MySpace, they won’t believe that this deal makes Yahoo more valuable than the more than $40 billion in cash and stock Microsoft is offering.
Second he points out, its’s not clear who would run the MyHoo combination. Third, because there’s a good chance that News Corp. is more interested in peeking at Yahoo’s secrets at the bargaining table than in actually stealing Microsoft’s prize. In business, everybody knows about Rupert’s shrewdness.
Finally there’s the strong possibility that News Corp. doesn’t really want to do a Yahoo deal at all, and is only dangling the MySpace idea as a way to gain information.After all, as a media baron who has struck big deals with both Google and Microsoft, Rupert Murdoch stands to be affected quite a bit if there’s a power shift in online advertising. There’s arguably no better way to prepare for the changes than to get an up-close look at what Microsoft would get by purchasing Yahoo — and that’s perspective Murdoch would be likely to get if he at least pretends to be interested in taking a stake in Yahoo.
But then, its business after all; and all is fair in love and war!