TechCunch is saying that that the off-again / on-again merger talks between Yahoo and Time Warner’s AOL are on-again and the deal could go through as early as this month. The deal has been talked about for the better part of this year and it makes as much sense as ever for both struggling companies. Time Warner has been dieing to get rid of AOL since the 2001 deal completely bombed. Yahoo, who has fought off Microsoft and has been in panic mode ever since, is looking to make some sort of blockbuster deal to give shareholders some confidence and hope. The actual details of the deal are yet to be known, but If the merger of Yahoo and AOL does goes through it would involve Yahoo getting all of AOL except their dial-up business (why hasn’t Earthlink bought this yet?).
Here is why I think the deal would be great for both companies. First, AOL has a laundry list of tremendous web properties that the far superior Yahoo Ad Platform could better monetize. Secondly, the integration of Yahoo & AOL mail / AIM & Yahoo Instant Messaging can not be underestimated – add the web properties with the web services and you are talking about a lot of eyeballs.
If this deal does go through, I would suggest Yahoo sell of its search business – get out of that losing battle and focus on web property and services monetization. Let Microsoft / Google battle for search share while Yahoo can start to dominate everything else.
