Yahews Corp?

Doesn’t have quite the same ring as Microhoo, aye? Nonetheless, word on the street is that Yahoo is talking to News Corp. in an effort to stave off an outright acquisition by Microsoft. In a letter to shareholders, Jerry Yang said he believes Yahoo should remain independent and Microsoft’s offer “significantly undervalues” Yahoo.

What are we to make of comments like these and discussions with other potential suitors, including AOL and even Google? Is Yahoo legitimately pursuing these alternatives? Or is it just trying to muster up leverage so that Microsoft will increase its offer? My guess is a little of both.

Speculation around the News Corp. deal has Yahoo gaining control of MySpace, IGN, Photobucket and other Fox Interactive Media properties in exchange for a 20% stake in the new entity. From what I’ve read, this would give MySpace a valuation of some $10 billion. Seems hefty considering News Corp. paid less than $600 million for it a few short years ago. However, given Facebook’s $15 billion valuation and the fact that MySpace has more users and far more revenue, it doesn’t seem that far-fetched.

But enough about the numbers. What would a Yahews Corp. deal mean for search marketers? Well, my guess is very little. There is the potential of added distribution for Yahoo’s search network -- although Google has MySpace’s search inventory locked up through 2010. As far as I know, FIM does not have any proprietary search technologies.

So this deal would really be centered on scaling display media -- which is a proposition not to be overlooked. Combining the behavioral targeting of Yahoo and Blue Lithium with the glut of impressions available via MySpace and Photobucket would add much needed volume to laser-targeted segments.

That said, as a search guy at a search firm, I am much less excited about the prospects of Yahews Corp. That’s not to say Microhoo is a no-brainer. Going from 3 players to 2 may not be in everyone’s best interests -- not to mention the significant hurdles to integration. But there’s no denying it would have a much bigger impact on the search landscape, what with Live Search’s 10% market share and the innovative adCenter technology. And, for better or worse, you have to admit it’d be exciting.

Posted by: Aaron Goldman, VP Marketing & Strategic Partnerships