MediaFile

Is Yahoo letting the fox in the hen house or did activist investor Carl Icahn settle after eyeing weakness in his campaign?

Whatever the case, Yahoo’s settlement with Icahn, who had planned to run a rival board slate but now gets three board seats including himself and possibly former AOL Chief Jon Miller, averts what was expected to be a bloody battle on Aug. 1.

Miller, who was pushed out of the Time Warner division, was responsible for turning the subscriber-losing AOL into an Internet company after dismantling its walled garden.

Left unanswered: What will Microsoft say later today? Did Icahn get assurances from the software giant that it would be willing to negotiate any deal with Yahoo in the new board configuration?

(Reuters )

Keep an eye on:

Macrumors.com founder Dr. Arnold Kim quits medical practice to blog full time. (NYTimes) Facebook to get redesign to give users more control. (Reuters) Batman smashes Spider-Man’s weekend box office record. (Reuters)

Google’s second quarter earnings disappointed Wall Street yesterday and sent its shares tumbling. The search giant blamed lower returns from managing its huge cash piles but analysts are also concerned the market leader in search advertising might augur a wider slowdown in online advertising.

Google itself said revenue growth from search ads was “positive” in every sector except for real estate, which was down by a small amount.

But the Street wasn’t convinced, perhaps because Microsoft also disappointed with its quarterly earnings citing “tough” economic conditions which impacted its software business and online ad sales.

Dallas Morning News and Providence Journal publisher AH Belo Corp is getting some online representation. David Morgan,  who worked at Time Warner’s AOL between September 2007 and February 2008, is joining the Dallas-based company’s board, the Morning News reported on Thursday.

Morgan was founder of Tacoda and Real Media. See Buzzmachine proprietor Jeff Jarvis’s short, complimentary writeup about Morgan here .

Also joining is John Puerner, former publisher of the Los Angeles Times, whose territory butts up against Belo’s Press-Enterprise daily newspaper in Riverside County, California.

Legendary media money manager Gordon Crawford blasted Yahoo Chief Jerry Yang for blowing the Microsoft deal in high profile interviews with the Wall Street Journal and the New York Times.

“I am extremely angry at Jerry Yang and at the so-called independent board,” Crawford told the Times. ”I’m hoping that there is such an outpouring of outrage that the board is embarrassed into revisiting this thing …  but I’m not optimistic about that.”

It may not be wise to aggravate Crawford, portfolio manager for Capital Research Global Investors, a division of Capital Research & Management, which owns 16 percent of Yahoo.

Microsoft dumped its offer to buy Yahoo on Saturday. A closer reading of Microsoft CEO Steve Ballmer’s letter to Yahoo’s Jerry Yang shows Microsoft is content to do nothing less than choke the air supply out of Yahoo’s trachea.

Consider these sweet bon mots in Ballmer’s letter, which is also a thinly veiled salvo at Google:

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

Time Warner’s first quarter results were yet another demonstration of how the one-time biggest media company on Earth is making some progress, but continues to grapple with its biggest issue — AOL.

First the good news (take-aways from the call):

Cable networks were a standout in the first quarter, with advertising revenue rising 13 percent. The strong audience ratings have inspired it to hold its presentation to advertisers on the same week as the broadcast upfronts. Bewkes: “You may have noticed that this year, Turner’s up front is scheduled for the same week as the broadcast upfront. That is not a coincidence. We believe Turner is now positioned better than ever to challenge the broadcast networks. This argument is increasingly resonating with advertisers and agencies and we expect to see that reflected in this upfront.” Just how good is it? Consider that CPMs at Turner are about 60 to 70 percent of the prices commanded by broadcast, Bewkes said. In a quarter when Wall Street expected rivals to steal share from cable operators, Time Warner Cable stunned investors by adding 55,000 basic video subscribers. Growth in new customers came across the board. Another bright sign this year could come from a decision to shrink film release windows. Time Warner plans to release all of its films on video-on-demand and DVDs on the same day. A decision to back Sony’s Blu-ray has encouraged Time Warner to now project industry wide sales of movies on next generation format to rise about 30 percent faster than it previously thought, or about $ 1 billion in sales. Time Inc, a perennially unloved division, has rarely been a source of good news for the company. But in the first quarter, its digital initiatives helped the division’s online revenue offset the decline in print advertising. Unique visitors were up about 30 percent year over year and page views rose 25 percent.

Now the bad…

AOL: Even as the rivals enjoy robust online advertising growth, AOL’s restructuring and “execution challenges” in trying to integrate over $1 billion worth of acquisitions hurt the first and probably the second quarter’s display advertising business. What’s also troubling to investors is that its third party advertising business, which commands lower margins, will be a bigger part of its business mix, executives said. Online ad growth will be better in the second quarter compared to the first, but 2008 profits is expected to be lower than last year. There was a small measure of relief that Time Warner has finally decided to split off its cable business, but investors were looking for much more — like news of a big special dividend paid out by Time Warner Cable to Time Warner shareholders for its troubles all these years — or any details at all. Why didn’t a single analyst ask a question about AOL’s context within the Microsoft, Yahoo bid? And none of the executives volunteered information either.

(Photo: Reuters)

With earnings reports for Yahoo and Microsoft out of the way, all eyes are now on Saturday, Microsoft’s deadline for Yahoo to accept its $43 billion offer.

And just in case Yahoo felt Ballmer’s comments were vague, Microsoft CFO Chris Liddell repeated: “We have yet to see tangible evidence that our bid substantially undervalues the company (Yahoo) … In fact, we see the opposite.”

Will they stay or will they go?

Alley Insider’s Henry Blodget is betting there’s a 60 percent chance Microsoft walks. After reporting a mixed quarter and below-target forecast, it’s looking unlikely Microsoft will raise its bid.

You’re nothing without a logo. And AOL’s Platform-A online ad sales division finally gets one.

From AOL’s Corporate site:

AOL today revealed the logo for its Platform-A advertising division. Lynda Clarizio, President of Platform-A, said that the new logo “effectively communicates our distinct competitive advantage of scale and reach. And its bold and simple design fits with our mission of providing advertisers and publishers with effective, impactful and easy-to-use solutions to their digital advertising needs.”

Complementary brand identities for companies owned by Platform-A will be rolled out in the coming weeks.

We weren’t expecting huge surprises during Yahoo’s earnings conference call, but CEO Jerry Yang was spectacularly vague about the Internet company’s plans vis-a-vis Microsoft or any other potential tie-ups — with Google, Time Warner’s AOL or News Corp — that Yahoo has been working on.

At the very start of the call, Yang essentially said “Don’t go there” to analysts and investors, reminding them about the purpose of the call.

“I’d like to remind you that today’s call is about our Q1 results, so please direct your questions to the quarter if possible,” Yang said.

What does the future hold for Yahoo? With so many media titans in the picture, it’s anyone’s guess how this merger mashup will end.

Just as it appears more likely that Yahoo’s days as an independent entity is drawing to a close, comes a possible deal that would lead to a bigger and better Yahoo.

News Corp is considering joining Microsoft in its bid, which would bring in MySpace and create a more formidable rival to Google.