Microsoft Figures Yahoo May Finally Be Desperate Enough To Sell

from the embrace,-extend...-extinguish dept

It seems that in the first half of every year there are some rumors that Microsoft might want to buy Yahoo. We heard it in 2006 and again in 2007. Now that it's 2008 and Yahoo is looking incredibly vulnerable, having just announced weak earnings and plans to layoff 1000 employees, and given their lack of a serious strategy, Microsoft has finally decided to take the plunge, making a somewhat unsolicited $44.6 billion bid for the company, representing a rather large 62% premium on the company's current valuation. This seems like a move both companies have to make, as a hail mary shot at coming up with something that can actually compete with Google. Going it alone hasn't been working. Both companies have been trying all sorts of tricks to get back in the race, without much success. Both seem to be living off a legacy past, but are unable to excite many new users. Microsoft has shown some signs of moving up the chart, but Yahoo has been steadily listing in the other direction. Combining the two gives them scale, but it'll still take a lot of work and has a high likelihood of failure. Merging two huge companies like this is not an easy thing at all, and could very well be distracting enough to actually help Google gain even more ground. However, given how little either has been able to seriously dent Google's momentum, it seems that they need to give this a shot.

Filed Under: acquisitions, mergers, online advertising
Companies: microsoft, yahoo

Should eBay Merge With Amazon?

from the growth-strategy-or-trouble-ahead? dept

Saul Hansell over at the NY Times has a thought-provoking piece asking if Amazon should buy eBay. While the two have been competitors for some time, Hansell is exactly right in pointing out that Amazon has continued to innovate and adapt, while eBay has basically held steady. eBay built up a tremendous business and has basically managed to keep that going without killing it -- but has done little of note that's new or interesting in a long time. It's recent purchases have been rather hard to understand, from Skype to Stumbleupon, and so far, haven't helped eBay very much at all. Meanwhile, Amazon keeps on innovating, improving its overall shopping experience while successfully moving into offering a variety of compelling web services (made even more compelling with the recent addition of its new database offering).

The real question might be what would Amazon do with eBay if it controlled it. There's something to be said for just having access to all those eBay users -- but could Amazon then turn them (and eBay itself) into something even more compelling? Or would tinkering with eBay be more trouble than it's worth? It might also raise questions about what Amazon would do with Skype. If anything, it seems like any such move would be quite risky. Merging two large companies with unique cultures is astoundingly difficult and often causes a lot more problems than bargained for. Amazon has been trying out a lot of innovative things lately, and trying to digest a company like eBay would risk a tremendous distraction that could hurt those projects.

Filed Under: e-commerce, mergers
Companies: amazon, ebay

Does ActiBlizsion Make Sense? Can A Merged Activision And Blizzard Really Work?

from the the-studio-model-at-work dept

The big news in the tech world this weekend, of course, is the slightly complicated merger between video game firms Blizzard and Activision to form the not-particularly-creatively-named Activision Blizzard. You can read the link above to figure out the complicated parts, including Vivendi's role, as well as the various amounts of cash going into the deal from both sides. As for the rationale behind the deal, it's one of those deals that seems to make sense on paper. It makes the combined company somewhere around the size of EA, the major player in the space. It also aligns the complementary strong points of each firm. Activision is big in console games like Guitar Hero while Blizzard is big in multi-player online games like World of Warcraft. Blizzard also has a strong presence in Asia. So, on paper, it sounds like a great deal. The tricky part will be actually making it work. Even with such clear complementary successes, it's not always so easy to merge two large players like this with different approaches to the market. What almost always happens when two large companies merge is that one side ends up taking over and the other group fights for a while and then leaves -- taking much of the reason for the merger away. Even more complicated in this case is that both companies are pretty dependent on coming up with new "big hits" on a regular basis to keep bringing in the revenue. EA's success (whether on purpose or not) has largely been driven by the ability to release "franchise" games that people will buy the next version of every year -- particularly in the sports arena. If the merger makes the company take its eye off the ball, leading to a weak set of products, it could be quite damaging. Maybe the companies will pull it off. Maybe they can figure out a way to actually build on their separate strengths without fighting themselves -- but it's a big bet to take.

Filed Under: mergers, video games
Companies: activision, blizzard, vivendi

NAB Spams FCC Over XM-Sirius Merger; Uses People Who Claim They Had Nothing To Do With It

from the sleazy-tactics dept

The National Association of Broadcasters (NAB) has been pulling out all the stops in fighting the proposed merger between XM and Sirius. What's most amusing is that the NAB's active involvement in the campaign against the merger weakens its own argument. After all, if XM and Sirius really would represent a monopoly, then doesn't that mean that the terrestrial broadcasters the NAB represents don't compete with XM and Sirius and therefore shouldn't care about the merger? Yet, the NAB keeps on fighting despite this rather obvious problem with its position. It seems as though the NAB can't resist pulling out just about every dirty trick in the playbook. It set up astroturf groups to create a pretend grassroots campaign against the merger. It also paid for a "independent" report from a research firm who had previously claimed that terrestrial radio and satellite radio competed -- but quickly changed its tune when the NAB was funding a study.

The latest is that, in the tradition of many other astroturfing campaigns, it bombarded the FCC with letters from "real people" against the merger. There's just one big problem. It would appear that many of those people have no idea they wrote the FCC, and some even claim they're in favor of the merger. That's what a Washington Post investigation found when it tried to track down the people who supposedly used the NAB's spam-o-matic website to protest the merger. Most of the people couldn't even be reached at all, suggesting that they might not even exist. Of those who were actually reached, nine out of ten claimed they had nothing to do with contacting the FCC and the 10th says she remembered reading something about the merger but doesn't remember protesting it to the FCC.

The NAB insists that its program is perfectly legitimate, and that the emailers all meant to protest the merger. An NAB spokesperson claimed: "It was a fairly rigorous process." How rigorous? Take a look at some of the quotes from folks who the NAB claims are absolutely against the merger and then let us know just how "rigorous" the process was:

• "How did they get my name? I don't want someone using my name for something I don't even know about."
• "No sir, I never sent any notes to Washington. This call is the first time I've heard of this."
• "I never sent an e-mail. I don't even know about the issue."
• "I don't know what the merger is about and I don't care. I have no idea what you're talking about."
• "Where did they get my name? If anything, I'd be for [the merger]."

Quite rigorous over there at the NAB, huh?

Filed Under: astroturfing, lobbyist spamming, mergers, nab
Companies: nab, sirius, xm

Making Sense Of Diller's IAC Breakup: Buy Low, Sell High

from the keep-making-deals dept

For years, we've joked about how Wall Street's dealmakers don't care if they're merging companies or breaking them apart: they have a script for both. When there are merger opportunities, it's all about the "synergies" of companies working together. When it's time to break them apart, you talk about "releasing shareholder value" that is hidden within the larger company. All it really means is another opportunity for another deal -- with the Wall Street folks taking their cut whichever direction things are going in. The latest to go through this pendulum is Barry Diller's IAC -- which has always been an odd conglomeration of internet companies. For years, we've wondered where all the synergies were that Diller promised the world when he started putting them all together -- and the latest answer apparently is that even Diller doesn't know. He's going to break the company up into five separate pieces in order to, yes, you guessed it: "increase shareholder value." While some are saying that this is classic Barry Diller -- a sign that he's more of a dealmaker than an executive, the timing of this might not be so crazy. After all, Diller did most of his buying during the dot com downturn, when many of the properties were undervalued. These days, with all the talk of the new bubble, and new enthusiasm on Wall St. for internet plays, the opposite is true. So while we tend to snicker at the "merge 'em up, break 'em down" thought process that goes into these efforts, in this case, it might actually make sense.

Filed Under: barry diller, conglomerates, mergers, spinoffs
Companies: iac

Wall Street Looking To Continue Its Buy 'Em Up Then Break 'Em Up Strategy With Yahoo?

from the next! dept

In the past, we've joked about Wall Street's amazing ability to convince companies that they need to acquire each other and merge to bring out "synergies" and then convince those same firms to later break themselves up into separate companies to "release shareholder value." It's all part of the shell game, where the investment bankers on Wall Street get to take out their huge fees whether a company is being built up or broken apart. It looks like the latest such target may be Yahoo, as an analyst at Sanford Bernstein has kicked off the discussion by noting that the company could release shareholder value by breaking itself up into three companies. Which companies? Well, it would want to split up the search and the advertising parts of the business... you know, the same parts of the business that folks convinced Yahoo it needed to buy four years ago if it was going to successfully take on Google. Now, of course, the only way for it to successfully take on Google is to get rid of those businesses. Luckily, the folks on Wall Street will happily help with both ends of the transaction for a small significant fee. Sometimes I think I'm in the wrong business.

Filed Under: acquistions, investment banks, mergers, spinoffs, wall street
Companies: sanford bernstein, yahoo

Political Gamesmanship In XM-Sirius Merger Rolls On

from the the-fun-never-ends dept

While comments filed with the FCC in support of the merger of satellite radio companies XM and Sirius outnumber those opposing it by nearly a four to one margin, they're not seen by many people to carry the same influence as those arguing against the merger. For instance, more than 70 Congressmen have told the heads of the FCC, DOJ and FTC that they should block the merger, and as stock pundit Jim Cramer points out, this has little to do with anything other than legislators' self-interest, since they don't want to upset local broadcasters in their constituencies. He adds that since XM and Sirius are up against such powerful opposition, they've had to go for broke, by announcing pricing plans that, if the merger's approved, could slice their average per-subscriber revenue. The plans offer consumers the ability to choose channels on an a la carte basis -- a move that looks like it's designed to appeal to FCC Chairman Kevin Martin, for whom indecent programming is always an issue. At the outset of the merger announcement, Martin said that XM and Sirius would have to show that "consumers would clearly be better off with both more choice and affordable prices" before the FCC would approve the deal. These new plans would appear to deliver consumers more choices and control over the content they receive, and do so at lower prices. But it's still hard to see that being enough to overcome politicians' objections, fueled by the National Association of Broadcasters' clout.

Filed Under: congress, doj, fcc, ftc, mergers, politics, satellite radio
Companies: nab, sirius, xm

New Reports Turn Over Conventional Wisdom On Pending Deals

from the forget-what-ya-heard dept

Two of the big pending M&A deals right now are Google's purchase of DoubleClick and the proposed tie-up between XM and Sirius. In the case of Google and DoubleClick, it's been assumed that the deal will clear regulatory muster, despite opposition to it from Microsoft. The Sirius-XM deal, however, has been seen as a longshot, in part because of the aggressive opposition to it from terrestrial broadcasters. But two new reports are pouring cold water on the conventional wisdom. An analyst at Bear Stearns believes that the satellite radio deal is looking increasingly likely, a conclusion arrived at by monitoring hearings and reviewing FCC documents. Meanwhile, a Washington policy expert believes that the FTC is likely to block the DoubleClick deal (via Tech Trader Daily), in light of the high concentration of online advertising power that Google would obtain through the deal. Whether you agree with his conclusion or not, he does argue persuasively that this market has indeed become quite concentrated. He also ends with the seemingly inevitable conclusion that Google is set to replace Microsoft as the chief target among the antitrust set.

Filed Under: antitrust, mergers
Companies: doubleclick, google, microsoft, sirius, xm

Clear Channel Says XM-Sirius Merger's Fine -- As Long As It Can Buy More Terrestrial Stations

from the the-more-things-change... dept

Matthew Lasar writes in to let us know that terrestrial radio behemoth Clear Channel says that if the XM/Sirius merger is allowed to proceed, restrictions on terrestrial radio station ownership should be lifted. Once again, by tying the two issues together, Clear Channel is making it clear that terrestrial broadcasters do compete with the satellite radio companies. It's hardly surprising to see Clear Channel take this stance, though, as it's consistently lobbied for the ownership limits (which state that a company can own no more than eight stations per market) to be lifted. The details from a Clear Channel exec's letter to the FCC are slightly amusing. The guy says "With poorer content, local radio stations will lose listeners, and, consequently, advertisers, not because local radio would face a better competitor after the merger, but because it would be able to offer only an inferior product to listeners and advertisers." His comments came in the context of saying that a merged XM-Sirius would lock up all kinds of content through exclusive deals, making it unavailable to terrestrial stations. But taken more broadly, you have to say that the guy knows what he's talking about, given Clear Channel's experience in churning out inferior products with little success.

Filed Under: broadcasting, fcc, mergers, radio
Companies: clear channel, sirius, xm