Microsoft, Yahoo, restless pigeons and balloons

January 8, 2009

Have you ever watched pigeons almost take flight as someone approaches, but after a brief flapping of wings decide to sit tight? That was the sense we got from reading the stories that knocked down the latest rumor about who will buy Internet search company Yahoo.

Here’s the story, posted by Michael Arrington’s TechCrunch blog:

Interest in troubled Internet giant Yahoo has not waned, it just took a break for the holidays.

A group of well known Silicon Valley executives and top investment bankers are putting together a Yahoo takeover deal that would be financed largely from debt supplied by Microsoft, we’ve learned from sources with knowledge of the proposed transaction.

Under the terms of the proposed deal, the investment group would make a takeover bid for Yahoo at a relatively low premium of around 20% to its current price of around $13 per share, valuing the company at just over $20 billion.

Nuh-uh, says Kara Swisher of Dow Jones’s All Things D blog:

[When] you actually talk to sources at the wallet itself-that would be the money-laden Microsoft — they scoff at the notion that they would help others buy Yahoo (YHOO), in order to get at its search business.

“We can deal directly with Yahoo, which is moving through a process to get a new CEO, and when the time is right, we will deal with their leadership,” said a source close to Microsoft’s thinking. “Getting involved in some convoluted deal with others in control…it’s idiotic.”

Why pigeons? Usually, upon stimulus, all those birds will fly away at once. When a plausible story looks like it’s ready to break, reporters will start flying around in a bunch too. In this case, Bloomberg flew, but it looks like the rest of the flock held off:

Microsoft Corp. isn’t holding talks to finance a new bid for Yahoo! Inc., a person familiar with Microsoft’s plans said, responding to a blog report.

Now for more literary imagery: Swisher elsewhere in her blog entry on the TechCrunch story recalled how at The Washington Post (and at most other news outlets), this is what they call a trial balloon. Float the balloon, see how many people shoot at it, then decide on further action based on the public opinion. Since this balloon lasted mere minutes, expect to see more of them dotting the horizon soon; someone seems to be trying to figure out what to do with a reasonable amount of cash and a canister full of helium.

Keep an eye on

  • The Boston Globe is a New York Times newspaper (for now). That means it does what the Times does. This week, that means running ads on its front page to bring in a few more ducats. (The Boston Globe)
  • Disney’s ABC outsources some of its overseas news reporting to the BBC because that kind of coverage is expensive. The Hollywood Reporter tactfully calls this an expanded “news partnership.” (The Hollywood Reporter)
  • Disney likes boys. (The Wall Street Journal)

(Photo: Reuters)

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