Time Warner, News Corp. Enter Yahoo Fray

Web-Portal Giant Resisting Microsoft’s Takeover Offer

By Robert Marich -- Broadcasting & Cable, 4/10/2008 11:21:00 AM

The languishing takeover battle over Web-portal giant Yahoo is heating up as reports Thursday indicated that the company is wooing Time Warner as a white knight, while Rupert Murdoch-led News Corp. is considering joining a rival Microsoft bid.

Microsoft made an unsolicited $40 billion cash-and-stock takeover offer 10 weeks ago, which Yahoo is resisting. Microsoft’s original offer was valued at $31 per share. Yahoo’s stock price was $27.77 at the market’s close Wednesday, and Yahoo is under pressure from its own shareholders due to its weak share price.

Yahoo wooed Time Warner, which would combine its struggling AOL portal with Yahoo and also provide cash in exchange for a 20% stake. It’s not clear if AOL’s dwindling dial-up business would be included. Yahoo would then publicly tender for some -- but not all -- of its stock at a price higher than the Microsoft offer, hoping to thwart the Microsoft bid.

The Yahoo plan is designed to leave itself nominally independent and give Time Warner a graceful way to exit operational control of the AOL portal, which would off-load what has been a corporate management headache.

Meanwhile, news reports suggested that Microsoft is talking with News Corp., which owns MySpace and a vast portfolio of traditional media, about acquiring Yahoo together. That could lead to a realignment of its key Web-portal assets, putting MySpace, Yahoo and MSN under one roof.