Microsoft, Time Warner in talks for collaboration to take on Yahoo, Google |
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Sat, 17 Sep 2005 06:10
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NEW YORK: Microsoft Corporation is in talks with Time Warner Inc. on potential cooperation in areas where their combined strength can offer better competitive edge against rivals like Google Inc. or Yahoo Inc. The talks centre around unifying their Internet assets with the possibility of Microsoft bringing in investments, according to sources in the know of things.
While Time Warner refused to comment, Microsoft could not be immediately contacted by news persons. The sources pointed out to a scenario where Microsoft could be opting for a stake in the AOL division. However, there is no imminent talk of a joint venture, the sources claimed.
Any Microsoft-Time Warner collaborative venture in the Internet domain can be a real threat to market leaders Yahoo! and Google as AOL and MSN will have a combined audience of 167.8 million, including overlaps compared to Yahoo's 101.3 million unique visitors and Google's 80.4 million in August. In search business, Google controlled 56 per cent of global search queries, Yahoo! Inc. had 22 per cent and Microsoft had 11 per cent according to figures for June.
Serious talks between the two had started early this year, but most of the focus was on search services and advertising. The new focus had come in in recent times, according to the sources. Microsoft had actually mooted the idea of the two working together in the search services, online advertising and instant messaging, following the settlement of anti-trust suit filed by AOL against the software giant. Google, interestingly, derives a considerable chunk of its revenue from AOL(11 per cent as per SEC filings), providing Web search technology and selling the text-ads. There is an agreement in place, signed in 2002.
There are reports that Microsoft had offered to sell its MSN portal and dial-up subscriber business to both AOL and Yahoo. Yahoo had rejected the offer, say these reports, while Time Warner had expressed keenness in pursuing the offer.
Time Warner is now planning a $5 billion share buyback over two years and intending to sell 16 per cent of its cable unit in an initial public offering next year. The company will close its buy-out of Adelphia Communications Corp then. AOL accounted for 21 per cent of Time Warner's 2004 sales and 18 per cent of its operating profit.
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