Articles of the Day


Yahoo Board Receives Letter From Ivory Investment Management Urging Salvage Of Microsoft Deal — Ivory Investment Management LP, one of Yahoo’s largest stockholders with 21.4 million, or 1.5% of the shares outstanding, today proposed in a letter to Yahoo’s Board of Directors that the company salvage a deal with Microsoft “and not miss another value maximization opportunity.” Noting Microsoft’s renewed interest, Ivory proposed that the company sell its search business to Microsoft, with Microsoft becoming the search provider for all Yahoo properties. Under the Ivory proposal, Microsoft would own and operate the combined search platform, with Yahoo becoming an affiliate that retains 80% of the revenue generated through searches on its own site. Finally, Microsoft would become the search engine for Yahoo’s existing search affiliates. We believe a search deal with Microsoft could deliver value to Yahoo shareholders of USD 24-29 per share, or more than double yesterday’s closing price of USD 12.19.” Ivory stated in its letter that it believed Yahoo could “receive more than USD 15bn upfront from Microsoft for its search business and increase EBITDA by more than USD 500m per annum.” “On an after-tax basis, the USD 15bn payment from Microsoft would be USD 9bn for Yahoo shareholders, leaving Yahoo with USD 21.2bn of cash and investments (up from USD 12.2bn today) and annual EBITDA of USD 2.4bn (up from the midpoint of current guidance of USD 1.9bn ). Applying a 5x EBITDA multiple on the “new Yahoo” would result in a value of USD 24 per share. If Yahoo were to go a step further and deploy the USD 9bn in new cash for its own shares at a USD 16 offer price, it could reduce its share count by 40% which would leave the remaining shareholders with a stock approaching USD 30 per share (amazingly close to the original bona fide bid from Microsoft).”

CBS Interactive To Merge CBSNews.com and CNET Newsrooms; Some Layoffs — CBS Interactive, under pressure to cut costs after what now seems like an even more costly acquisition of CNET, is announcing some more restructuring tomorrow, we have learned from reliable sources late tonight, and as part of it, will be merging CBSNews.com and CNET newsrooms. Not clear: if it is merging the two main websites CBSNews.com and News.com. As a result of this merger, there will also be some layoffs, but we couldn’t figure out the extent of those.

Time Warner Cable Split Still On Track For Early 2009 — Time Warner CEO Jeff Bewkes says the Time Warner Cable (NYSE: TWC) spinoff “is on track to get executed in early 2009. … We don’t see any problems really from any side of the transaction.” That should mean an $11 billion payout for all shareholders is still on the way—including $9 billion for parent Time Warner (NYSE: TWX). It also means a return to a content-centric company. Bewkes is the lunch speaker at the UBS Global Media and Communications conference.

Bewkes On AOL: Will Do Whatever Creates Most Value; Needs To Be ‘Fairly Soon’ — Updated: Looking for clarity when it comes to Time Warner (NYSE: TWX) and AOL? So are we—Time Warner is exploring just about every variation you can imagine when it comes to AOL, based on the exchange CEO Jeff Bewkes just had with UBS moderator Aryeh Bourkoff, who asked the questions in just about every way possible. The short answer: “I’d like to get it resolved, meaning clear… so AOL can be seen and valued… We need to do it fairly soon and we’ve been working hard on it.” And, no, he won’t translate “fairly soon” into a real time frame. Bewkes isn’t complaining about operations and said if AOL were a TV network, “he’d say the ratings are up. ” But, he admitted to investors, ad sales are not up the same way and have been disappointing to us and to you.” AOL’s performance is further hampered by being “essentially in third place” and not a market leader. “Because of that, even though some excellent work is being done on cost cuts, programming and traffic,” AOL’s value is being lost. The questions: what would be the improvement in economics from a combination and would the result be “reasonably as good or better” than TW can do with any other option?

RBI Sale Cancelled; Reed Elsevier Still Wants To Sell It In Medium-Term — The verdict is in and the answer is: no sale. Reed Elsevier (NYSE: RUK) has announced that its torturous, nine-month campaign to sell the B2B magazine division is over. Reed announced to the stock market this afternoon that it has “terminated discussions with potential bidders” and that due to the poor economic outlook, shareholders would get more value by the company hanging on to the Farmers’ Weekly and Variety publisher. RBI now remains separate business and will be run by RBI UK CEO Keith Jones as overall CEO of the company.

Gannett’s ContentOne Ties Local Content With National Ads — It’s a tougher time for newspapers, but Craig Dubow, Gannett’s chairman, president and CEO, has a basic answer for the continued existence of newspapers: consumers will always need content and advertisers will need to reach them. As for why newspapers are the best vehicles for that connection, Dubow turned, interestingly enough, not to print, but to Gannett’s web properties. In particular, Dubow, speaking with two other Gannett (NYSE: GCI) execs at the UBS Global Media and Communications (PDF) conference, touted a forthcoming program called ContentOne, which he said “will completely change the way we share content across the company, especially at the local level. It will be created using the web start-up model.” It should be up sometime in Q1. The idea is “local content on a national level,” and will use the regionally focused sites MomsLikeMe and Metromix as the foundation.

CBS Wouldn’t Buy CNET In This Market; ‘Highly Doubt’ Any Acquisitions — CBS CEO Leslie Moonves raved about the value of the CNET acquisition and the integration since the merger with CBS Interactive, but told investors he wouldn’t make the same deal today. “The CNET deal was in May….Life was very different. We would not be doing that acquisition today.” As for other acquisitions, “I highly doubt you will see us acquiring anything in the near future.”

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