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Internet Is Driving Media Mating Dance
By: AP   |   May 06,2007
News Corp.'s Rupert Murdoch has a $5 billion crush on the owner of The Wall Street Journal, Thomson is eyeing Reuters and Microsoft apparently is flirting again with Internet icon Yahoo.

The media mating dance that broke out this week is part of a mad scramble not to just provide the content, but to find the right mix of technology and business savvy to remain relevant and profitable amid the upheaval wrought by the rise of the Web.

''Media companies are trying to adapt quickly and they are looking for some help,'' said Ryan Jacob, a money manager who runs fund specializing in Internet stocks.

Even mighty Microsoft—the world's most valuable technology company and a catalyst in the personal computer revolution—seems uncertain about its ability to cope on its own. It currently trails both Google and Yahoo in the lucrative and growing business of selling and displaying ads linked to search terms.

How else to explain Microsoft's reported decision to renew its on-again, off-again takeover talks with Yahoo?

Although neither Microsoft Corp. nor Yahoo Inc. would confirm negotiations reported Friday by the New York Post, some investors seem to think the couple could make it to the altar this time. Yahoo shares shot up more than 19 percent Friday before settling back to finish at $30.98, up $2.80, or 9.9 percent.

Redmond, Wash.-based Microsoft is reportedly considering paying about $50 billion, or $35 to $37 per share, for Sunnyvale-based Yahoo.

Although he doubts the deal will get done, Standard & Poor's equity analyst Scott Kessler understands why it might make sense for Microsoft and Yahoo to get together.

A combination ''would address the major problem that both companies have been trying to deal with,'' Kessler said. ''They both have a lot of users, but their problem has been translating that into higher revenue and profits. Neither has been doing it as well as Google.''

Any discussion about the media's challenges and opportunities these days usually involves Google Inc., whose Internet-leading search engine has become the Web's biggest moneymaking vehicle as well as an influential gateway to other online destinations.

As the operators of the second and third largest search engines behind Google, Microsoft and Yahoo obviously may be trying to figure out if they would be better off trying to gang tackle the industry leader.
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