MediaFile

Microsoft and Yahoo: The morning after

Ah, the morning after.

Microsoft and Yahoo have finally come to an understanding, putting to rest what seemed like an endless back-and-forth (As Barry Diller said yesterday,  “We’re not going to have to talk about whether or not it’s going to happen anymore).

In case you were at the beach, on the golf course, riding your bike, or hiding out in a cave yesterday, here are the very basics: It’s a 10-year Web search deal; doesn’t include display; Microsoft will the guarantee revenue per search for the first 18 months; Yahoo expects deal to boost income by $500 million and save about $200 million in capex; Microsoft will pay traffic acquisition at an initial rate of 88 percent; Yahoo will act as the global sales force for both companies’ premium search advertisers; etc. etc.

Just about everyone has weighed in on the deal, and more analysis is certain to come in the days ahead. In the meantime, here’s what we see as a few key questions about the deal.

Will it get regulatory approval? Tough call. It certainly will get a close look, given the high-profile names of the companies involved. And, remember, it leaves really only two major search engines rather than three. On the other hand, is the market really competitive at the moment? And won’t Google just keep extending its lead — and hurting competition — if Yahoo and Microsoft don’t get together? “Without this deal, I think it would be really unlikely that you’d have a market with three robust search providers in 10 years,” said Beau Buffier, an attorney with Shearman & Sterling LLP. (More here from Reuters)

What do advertisers and media buyers think? Most appear, at first blush, to be happy with the deal. Having one dominant search player — Google — makes it tough for the advertising community. So they seem to welcome the idea of some competition. Plus, it simplifies life for media agencies. “”This is extremely encouraging and introduces more balance into the search and display markets,” said Sir Martin Sorrell, chief executive of British advertising group WPP. “It is good for our clients and our agencies and for regulators.” (More here from Reuters)

from DealZone:

Truth in tender offers? An eyewitness account.

U.S. Securities regulators on Thursday sued a well-connected Kuwaiti financier, saying he reaped millions in suspicious profits after false takeover reports briefly sent shares of Harman International Industries soaring this week.

Reuters reporter Ransdell Pierson was in the office working the Sunday shift when he received a fax with the purported takeover offer.  Unable to verify the authenticity of the fax, Reuters did not publish the story.  Here is Ransdell's first person account of what happened, and a copy of the fax. Would you have questioned its veracity?

Ransdell Pierson:

I was scouring newspapers on a Sunday shift in the Reuters New York bureau and waiting for news about distressed lender CIT Group, when the phone finally rang and broke my reverie. "Newsroom," I said, and the caller replied, "Your Jeddah bureau is closed today. Can I send you a fax?" The male caller, who I imagined to be a middle-aged office aide frustrated by the thankless chore of delivering his fax, said it was a press release about a deal. Something about one company buying another for about $3 billion.
"If it's such a big transaction, shouldn't this news be coming over the PRNewswire or BusinessWire?" I asked him. He explained that it was the weekend, so faxing a press release was the best route.
I gave him a fax number and he called back, irritated the document hadn't gone through. I gave him another fax number and he soon called back again, more irritated than before. So I gave him the number of a third Reuters fax machine, but told him that it needed to include contact information for all the parties. "Otherwise, we can't authenticate it." "OK, you'll have it," he replied.