Why Yahoo Bowed Out Of AOL Talks; Why Google Is Best Bet

WSJ has a good story on why Yahoo took itself out of talks with AOL, for a stake or buyout…among the reasons: Time Warner’s desire not to give up majority control of AOL and its unwillingness to accept an Internet stock as payment for a stake, says the story.

Yahoo had proposed swapping 20% of Yahoo for 80% of AOL’s content business, the story says, though both companies officially said no offer was made…Based on Yahoo’s stock-market capitalization, that would have translated into a roughly $13 billion valuation for AOL’s content business.

Yahoo had concerns about the valuation Time Warner was seeking and possible difficulties integrating the two businesses after any deal…

AP: Under one proposal, Time Warner would keep all of AOL’s Internet access business, which is in decline as users abandon dial-up connections for higher-speed cable and DSL lines.

BW has a story about why Google might be the best partner for AOL..it will be a low maintenance partnership, as the two already work close together…The pair are discussing broadening their partnership so that AOL can sell search terms served up by Google to AOL’s advertisers, says the story quoting sources. The two are also exploring teaming up on video search: AOL claims its video-search capabilities in some ways outshine Google’s because it has struck partnerships with content providers such as HBO, Warner Bros., and MarketWatch, among others.

Last, the duo is talking about ways Google could generate more traffic to Time Warner’s Web sites without abandoning the search company’s neutral approach to driving traffic to partner properties.

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