MediaFile

So Microsoft is now proposing a new deal: This one could be some sort of partnership or joint venture for search-related advertising to take on Google Inc, the New York Times reports.

Just one problem. Carl Icahn doesn’t appear to be hot on the idea. Reuters, citing a person familiar his with the financier’s thinking, reports that this latest talk about an partial Microsoft-Yahoo alliance could prompt the billionaire investor to press Yahoo to further pursue a deal with Google.

“Microsoft is trying to get the milk without buying the cow, and if you look at Icahn’s history, he has never been used that way,” said this person. “He does not want to see Yahoo pushed into some joint venture with Microsoft and is not going to be used to push Yahoo into it.”

Icahn launched a proxy campaign last week to replace Yahoo’s board, saying it acted irrationally in refusing Microsoft’s $47.5 billion bid.

Icahn’s presence further complicates the Yahoo situation. He’s accumulated 59 million shares and options in Yahoo and has the support of Paulson & Co, a $30 billion hedge fund that has amassed a 3.4 percent stake in Yahoo, and other investors upset by the board’s handling of negotiations with Microsoft.

Remember those scary movie close-ups of a fly caught in a spider’s web, or some tourist who steps into quicksand, or another variation of the same? How with each twist and turn to get free, the captive enmeshes themselves deeper into the trap? 

We’re starting to get that uncomfortable feeling about Yahoo as it dodges the embrace of Microsoft while trying to orchestrate a partnership with Google that won’t encroach on its own business. The New York Post says today that a deal with Google, already at the “any minute now” stage for almost a month, could be sealed next week.
    
Some of the moves could provide a boost down the line, like a new ad-trading partnership with WPP Group, the world’s second largest advertising services company. 
    
[N.B. WPP chief Martin Sorrell said last week it was a shame Yahoo and Microsoft couldn't work it out, since their break-up just leaves Google the biggest kid in the playground]
    
But Yahoo does not have that much more time to prove it can go it alone. Yesterday, Yahoo stood up to billionaire Carl Icahn, who officially launched his proxy fight to deliver the company back to Microsoft. That means there must be some resolution by the time Yahoo’s shareholders meet on July 3. (Reuters)

Keep an eye on:    
* “Gossip Girl” can’t save ratings for the CW network. (WSJ)
    
* Fox embraces Less Is More principle, cutting ad time for two new shows. (Hollywood Reporter via Reuters)

Some might detect the faintest note of irony in the fact that Carl Icahn has nominated Mark Cuban to be one of Yahoo’s directors as part of his proxy fight against the company. It was Cuban, after all, who sold the now defunct Broadcast.com to Yahoo for $5 billion+ at the peak of the dot com boom.

Cuban, now known best as the enthusiastic owner of the Dallas Mavericks pro basketball team, seems to be relishing the opportunity to take on Yahoo’s rival Google. He wrote on his blog Wednesday:

“Is there anything more fun than sitting around, growing your hair, drinking a Bud while listening to Jethro Tull and pondering how to change the balance of power in the search world and unseat Google?”

Billionaire investor Carl Icahn fired a salvo at Yahoo on Thursday morning, threatening a proxy fight unless Yahoo gets Microsoft back to the negotiating table.******In a letter to Yahoo Chairman Roy Bostock he said Yahoo’s board had acted “irrationally” in turning away an offer that amounted to a 72 percent premium and warned Yahoo not to announce any “strategic alternatives” (such as a deal with AOL or Google) without a shareholder vote.***

I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.

***Icahn also disclosed he has purchased 59 million shares and has sought antitrust clearance from the FTC to acquire up to approximately $2.5 billion worth of Yahoo stock.******Microsoft has remained quiet so far. Wall Street Journal reported earlier that Icahn had been yet unable to lock in Microsoft’s support.******Also, despite having nominated a 10-member slate, which include Icahn, former Viacom chief Frank Biondi, Icahn Enterprise’s vice chairman Keith Meister, former New Line co-CEO Robert Shaye and corporate governance expert Lucian Bebchuk, he could yet settle for a smaller slate of Yahoo directors.******After spending a week telling the world how uninterested they are in Yahoo, Microsoft has remained quiet so far.******(Reuters)******Keep an eye on:***

*** CBS to buy CNET Networks for $1.8 billion to boost its Web presence, and maybe laying to rest a CNET activist investor fight (Reuters)

*** Ask.com to expand its vocabulary with plans to buy Lexico, owner of Dictionary.com and Thesaurus.com (Reuters)

***

***(Picture: Reuters / Icahn at the Lazard presentation during the Time Warner battle.)

Somebody’s knocking on Yahoo’s door this week and it isn’t Steve Ballmer, yet. We wondered whether someone was building a position that helped keep Yahoo shares aloft since Microsoft pulled back from deal talks about a week and a half ago. 
    
It turns out that activist shareholder par excellence Carl Icahn has accumulated about 50 million shares in that time and will likely decide today whether to launch a proxy contest, before Yahoo’s deadline for board nominations expires on Thursday.
    
What may sway his decision is a sign from Microsoft that it is willing to come back to the table after Yahoo rebuffed a sweetened $47.5 billion offer. 
    
According to the Wall Street Journal, some other shareholder activists may be spoiling for a fight, including Firebrand Partners’ Scott Galloway, whose powers of persuasion won him a board seat at the New York Times earlier this year.
    
While all of this may not be good news for Yahoo CEO Jerry Yang, the action could well buoy shares in the meantime, at least until he reaches his own conclusions on how to proceed.
    
(Reuters) (WSJ)     

Keep an eye on: 
* Clear Channel’s buyers and banks settle on how to finance the deal. (Reuters)

* Barry Diller and John Malone make nice on spin-off plan for four of IAC’s business units. (Reuters)

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.

MediaFile wrote last week about Steve Ballmer’s world tour to promote Microsoft’s unsolicited takeover bid for Yahoo. Now that the Microsoft has walked away and the odds for Microhoo aren’t looking so hot, Microsoft execs have fanned out across the globe to explain the company’s decision. To Skhirat, Morocco, San Donato Milanese, Italy and Louvain-la-Neuve, Belgium, we can now add Seoul, London and Jakarta.

Let’s put them up on the big board!

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And it was thus decreed that the messengers of Steve Ballmer were sent far across the land to say No to an alliance with the kingdom of Yahoo:
    
“Yahoo could always come back again and say please buy us for $33 (a share) and I’m sure we might reconsider it, but we’re not assuming that’s going to happen,” Microsoft Chief Research and Strategy Office Craig Mundie to Reuters in Jakarta, May 8. 

“The conclusion was reached that we should pursue our independent path,” Microsoft Chairman Bill Gates in Tokyo, May 7.    
    
“The key decisions on that will be made by Microsoft CEO Steve Ballmer, who took a look at Yahoo and decided that, on our own, he likes the stuff that we’re doing,” Gates in Seoul, May 6.

“We decided to move on and basically withdraw our offer …. Absolutely, that’s the end of the story. We are moving on because our strategy is very clear,” Microsoft International President Jean-Philippe Courtois to Reuters in London, May 6.

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.

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.”