As the Microsoft-Yahoo will-they-won’t-they? saga drags on, Google’s role in any future talks becomes more apparent.

On Thursday Google CEO Eric Schmidt said a two-week trial selling search advertisements on rival Yahoo last month had given the companies good reason to discuss cooperation, but there was no deal yet.

That isn’t great news for some in the online advertising world.  As commentators have pointed out, a Google-Yahoo partnership (Yahoogle? Yoogle? Gahoo?) could concentrate too much power with just one team. This has led to some folk to paint Microsoft as the little guy. Yes, the same Microsoft, which is a Monopoly 101 case study for first-year economics college students.

In a TV interview with CNBC on Friday, WPP CEO Martin Sorrell said, “It was a shame…that those negotiations failed. Maybe they’ll come back again.”

Sorrell, whose empire of ad agencies includes Ogilvy, JWT and Y&R,  said the advertising industry lost a potential balancing influence in the Web search market when the talks between Microsoft and Yahoo collapsed.

Meanwhile,  Silicon Alley Insider reports that Google is seriously considering having display ads on its home page, based on statements from executives. SAI estimates Google could add up to $3 billion to $4 billion in annual revenue if it decided to do so.

 Keep an eye on:

* British video search engine company Blinkx sees it shares fly on rumors of a possible bid by News Corp or Google  (Reuters)

* MySpace lets users share their profiles across the Web (Reuters)

* Real Networks spins off its gaming division (GigaOM)

(Photo: Reuters)

Yahoo Chief Jerry Yang is leaving the door open to Microsoft, he tells us. In an interview with Reuters’ Michele Gershberg, Yang says he had been seeking common ground when Microsoft abruptly ended deal talks.

Yang: “We were negotiating a way to find common ground and then on Saturday they chose to walk away.”

Asked if they’re up for more from Microsoft, Yang says, “If they have anything new to say, we would be open … I am more than willing to listen.”

Is this a cover-our-butts move in the event they face shareholder lawsuits or is it a candid appeal to Microsoft to come back to the table?

Separately, sources are telegraphing that a final agreement between Google and Yahoo has not been reached as they discuss a potential deal with regulators. They also say any potential deal with Yahoo would not be prohibitive to Yahoo striking other agreements down the line. The move appears to be Google’s attempt at playing both sides — offering a carrot to Yahoo, while appeasing regulators.

The intrigue builds …

IBM Chief Executive Sam Palmisano gloated to an audience of companies that sell its wares that Big Blue would make it through the current economic downturn with flying colors, since it is old and experienced. Riffing on the idea of age, he compared his tech behemoth to Internet star Google Inc, whose CEO Eric Schmidt was about to join him on stage in LA.

“It’s interesting when people think about companies like IBM and Google. I mean, we couldn’t be farther apart. We’re old, they’re young, we’re kind of boring, they’re innovative, we’re slow, they’re fast, we’re fat, they’re skinny,” Palmisano joked.

“How could you guys possibly work together?” the IBM chief asked himself. “I don’t know!” (The conclusion was that they worked well together, after all.)

Oddly enough, Palmisano may have edged out Schmidt on the cool factor though — the Google chief showed up in jacket and tie, while Palmisano strode around the stage with an open collar.

 (Reuters picture of Schmidt is from a different event, same look)

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.

When he touched on Microsoft — referring to it as three months of “uncertainty” — it was to reiterate the same line: “Our board and management are committed to choosing a path to maximize shareholder value.”

At the same time, Yang was bent on convincing analysts and investors that, despite an unchanged revenue forecast for the year, Yahoo deserves a higher price than the $43 billion cash-and-stock deal that Microsoft has offered. Is that because Yahoo piggybacked on gains from a stake in China’s Alibaba.com to a higher quarterly profit? Or because Yang said Yahoo’s “strategies and investments are beginning to pay off”?

Not that analysts or investors were convinced. Most continue to believe that Yahoo’s earnings are unlikely to put pressure on Microsoft on raise its bid.

Microsoft CEO Steve Ballmer, meanwhile, said before the earnings, “I wish Yahoo all the success with its results, but it doesn’t affect the value of Yahoo to Microsoft.”

So where does that leave Yahoo now? Wednesday might offer some clues, when Yahoo’s two-week test on outsourcing search advertising to Google ends. Or it may not. Yahoo chairman Sue Decker already swatted hopes on the call, saying it’s “premature” to speculate on what sort of deal the two might strike.

Photo: Yahoo CEO Jerry Yang (Reuters)

Google suprised the market with better than expected quarterly results despite worries that it was being hit by economic weakness after comScore data showed it having trouble converting Web search into ad viewer. Google CEO Eric Schmidt even went as far as to say the company would still perform well for the whole year ”regardless of the business environment.” For investors, the results wiped away fears that Google was just as vulnerable as any company to recession fears and, as of this morning, company shares were up more than $80.

Some analysts noted that Google growth slowed from the previous quarter and that the good results did not completely eliminate concerns about its prospects (New York Times) . While Lehman and Merrill Lynch rushed to see who could raise their price targets for Google higher, shares of comScore quietly fell 8 percent. 

Schmidt gave less satisfaction in his comments on the company’s dealings with arch-rival Yahoo, but his tone was sweet: “It’s nice working with Yahoo and we like them very much.”

Keep an eye on:

•  Sam Zell eyes Chicago Cubs sale, undecided on Newsday fate (Reuters)
•  CW to pull free Internet streams for new “Gossip Girl” episodes, says watch it on televsion  (LA Times)
• Viewers are not rushing back to their favorite TV Programs (Advertising Age)
• Sony-BMG Reshuffles, gives legend Clive Davis a new title — and may be showing him the door. (Silicon Alley Insider)

(Photo: Reuters)

“It’s a success! Now what?”

Yahoo may be ready to turn over its Web search advertising to Google following a successful test using Google’s service to deliver ads alongside its Web search results. But that’s only the beginning of what could be a swirl of deals. Or Not.

The way PaidContent sees it , if this alternative stands, and then, say, AOL merges with Yahoo, then the Google-Yahoo arrangement may have to pass anti-trust muster. And regulators are likely to give a thumbs up, TechCruch says, adding this rosy tidbit:

Everyone, even Yahoo, realizes that a Google search deal is a slow but certain death for the company.

That is unless Microsoft buckles and ups its $31 a share offer.

What do you think will happen to Yahoo?

(Wall Street Journal)

Keep an eye on:

• Thomson Reuters debuted on Thursday as a leading global information company, hoping a portfolio of products from financial to legal and health-care will help it ride out a financial industry downturn. (Reuters)
• Universal Studios will soon release all its new videos on the victorious Blu-ray rival at the same time as its standard DVDs. Universal’s Blu-ray strategy includes plans to release about 40 titles in the second half of the year. (Hollywood Reporter)
• Google’s troubling trend of slowing click growth has Wall Street worried the Internet giant will fall short of forecasts when it reports first-quarter results later today. (NY Post)
• PepsiCo has dumped the agency that had been handling its massive Gatorade and Tropicana accounts for the past six years, throwing that agency’s future into question. (WSJ)

(Photo: Reuters)

Another day, another story about job cuts and cost cutting in the publishing business.

This time its the New York Times, where an offer of voluntary buyouts may turn into involuntary dismissals.

Back in February, the company said it would eliminate 100 newsroom jobs amid the weakening economy and declining revenues from advertising and circulation. An attempt was made to keep the move bloodless but that didnt quite work. In an internal memo, assistant managing editor Bill Schmidt said the number of people expected to take buyouts likely won’t meet the 100 target.

This comes in the wake of other publishers job actions, including The Modesto Bee , a McClatchy paper, where about one-quarter its 455 employees were offered buyout packages in every division, although the company says the buyouts will affect a “very small” number of the newsroom’s 90-plus employees and thus should have a minimal impact on readers.

Also, Newsweek  is reportedly shrinking its rank and file as 111 staffers on its news and business sides accepted a buyout.

By the way, Radar has a list of those who took the New York Times buyout offer, including Pulitzer Prize winners John Noble Wilford and David Cay Johnston, and Linda Greenhouse, the newspaper’s legendary Supreme Court correspondent.

(WSJ )

Keep an Eye on:

• Mario Gabelli, one of Media General’s largest shareholders, said he plans to vote for a slate of directors nominated by a dissident shareholder looking to make changes at the struggling media company. (AP via Star Tribune)
• Hollywood director Barry Sonnenfeld fears that children today will grow up with “no concept of the right to privacy and in fact not understand the need for it.” (Hollywood Reporter )
• Yahoo may have started gaining share in the Web search ad market against Google even as Google’s share of search audience inched up. (Reuters)

(Photo: Reuters)

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.

But Yahoo is closing in on a deal with Time Warner Inc that would fold AOL, excluding its legacy dial-up Internet access operations, into a combined Yahoo company.

Oh, and Yahoo is testing a Google ad search system as a potential way to keep Microsoft at arm’s length.

Got all that?

(WSJ)
(New York Times)
(Reuters )

Keep an eye on:

• “CBS Evening News” anchor Katie Couric is likely to leave the network well before her contract ends in 2011. (WSJ). On the other hand, CBS says “we have no plans for any changes regarding Katie or the broadcast.” (LA Times) If Couric is eased out as anchor, CBS plans to offer her either a syndicated talk show or a full-time role on “60 Minutes.” (Washington Post)
• HBO has named television agent Sue Naegle as its new entertainment president. (LA Times )
• Sling Media is expected to miss its second quarter goal of releasing SlingCatcher — a set-top box that brings video content from a Slingbox to another TV in a house, or from an external hard drive. (CNET )

(Photo: Reuters)

Brain drain at Google?

The defection of Douglas Merrill, vice president of engineering at Google, is part of a growing trickle of senior managers to leave a company that topped Fortune magazine’s annual list of best companies to work for in 2007.

All the more surprising is that he’s leaving the college-like pastures of Googleplex for the growth-strapped music business at EMI to become head of EMI’s digital business. EMI announced earlier this year that it planned to cut some 2,000 jobs.

Google lost its vice president of global sales, Sheryl Sandberg, in March to Facebook. Then there’s George Reyes, Google CFO, who retired last year. Wired provides a longer list of defections and their new projects.

New York Times: “We have a deep bench and work hard to grow leaders within the company,” Google said in a statement. “We are attracting immensely talented people around the world, every day.”

Part of the exodus probably has to deal with the natural timeline of all hot IPOs, when stock options that vest in four- or five-year periods suddenly give executives more financial wiggle room, Wired says.

Regardless, this much is certain. It takes more than free lunch to keep top talent these days.

(Reuters)

Keep an eye on:

• Newsday auction gets a potential new suitor — New York Observer owner Jared Kushner. (WSJ)
• Murdoch daughter Elisabeth Murdoch hosts fundraiser for U.S. presidential candidate Barack Obama, not Hillary Clinton. (Guardian)
• Video search engine Blinkx launches online tv service. (paidContent)

(Photo: Google)

Google showed how funny its plans for world domination could be by issuing an April Fool’s invitation to establish a human colony on the planet Mars in an expedition led by co-founders Larry Page and Sergey Brin together with friend and Virgin founder Richard Branson.

“Earth has issues, and it’s time humanity came up with a plan B,” said Google as it urged users to sign up for ”Project Virgle”, due to leave Earth in 2014.

The elaborate prank includes a YouTube video featuring Brin and Page, an application form asking wannabe Mars pioneers for their opinions on algae as food or 1/3 gravity, and a 100-year plan.

In the real world, Google is cooperating with NASA on a number of technology projects and is trying to help encourage the space industry to become more entrepreneurial. 

The joke continues a Google tradition that began in 2000 with the April 1 launch of the MentalPlex, a swirling spiral promising smarter and faster searches when users stared into it while projecting a mental image of what they wanted to find.

Other examples included Google Romance in 2006, that treated finding love as “just another search problem” and offered to send couples on a ”Contextual Date^“, paid for by Google as long as they endured relevant ads during the date.

Funniest of all was Google’s announcement to the public of Gmail on April 1 2004, which many took for a hoax because of the unprecented 1 gigabyte of free storage on offer. It wasn’t.