The high-stakes match for a stake in Time Warner’s AOL has now seen Yahoo fold its hand and walk away from the table, leaving Microsoft and Google to battle over AOL.
Being a desired property brings a simple rule of supply and demand into play. AOL became that property, and several big Internet players pulled up a chair at the table, where Time Warner told them the starting price.
WSJ.com reported today that the price was more than Yahoo was willing to consider:
Yahoo Chief Executive Terry Semel met with Time Warner chairman Richard Parsons in New York to discuss a possible deal in late October, according to people familiar with the matter.
A Yahoo spokeswoman acknowledges there was a meeting, but denies Yahoo ever made any offer. “After we learned what their proposed deal terms were we passed and we’ve never looked back,” said the spokeswoman.
Time Warner, in turn, was reportedly not impressed by Yahoo’s offer.
That leaves Microsoft, long-rumored to be the front-runner, and Google to bid for AOL. Both sides have their appeal to the company. Google currently provides AOL with advertising, which in turn sends Google roughly 12 percent of the search engine’s corporate revenue.
Microsoft could bring advertising and search, and probably a better share of ad revenue for AOL. Google ads ended up earning $300 million for AOL last year, a figure Microsoft would have to sweeten.
The Journal article contends Google has pulled alongside Microsoft in the negotiations. Also, concerns about antitrust issues if AOL and Microsoft combine dialup businesses have Time Warner execs worried.
A minority stake purchased by Google in AOL wouldn’t have that concern. For now, though, no one still involved in the talks will comment publicly on the discussions.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
