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Murdoch Drops Out of Yahoo Bidding

Posted on: Tuesday, 11 March 2008, 15:00 CDT

One of Yahoo's potential white knights in its struggle to avoid being taken over by Microsoft just put his charger back in the stable.

News Corp. Chairman Rupert Murdoch told a Bear Stearns conference in Palm Beach, Fla., Monday that he's not going to battle the Redmond, Wash., software giant for Yahoo.

"It would be fun to beat Microsoft," he said. But "we're not going to get into a fight with Microsoft. They've got a lot more money than us."

Murdoch's News Corp. has been touted as a possible savior for Yahoo, and there were reports of discussions between the two companies.

Murdoch controls Fox News Channel, the Fox broadcasting network and the 20th Century Fox studio, MySpace, and the recently acquired Dow Jones, which publishes the Wall Street Journal.

Apparently Murdoch won't be the Sunnyvale company's savior, but he chose his words carefully and seemed to leave the door to a deal open a crack. Asked about a combination of News Corp. assets such as MySpace that would add to Yahoo's value, Murdoch said, "I think that some deal would have been nice but it's probably not possible."

"It's not that they wouldn't do something," said Martin Pyykkonen, an analyst who covers News Corp. and Yahoo for Global Crown Capital. "It's just that he said he's not going to chase them or get in a bidding war with Microsoft over Yahoo."

Pyykkonen said what had been talked about was Yahoo taking MySpace in return for giving News Corp. a 25 percent equity stake.

Yahoo had no comment.

Yahoo's other potential savior is Time Warner. Yahoo is exploring a possible deal with Time Warner in which it would absorb that company's AOL portal in exchange for a stake in Yahoo.

Microsoft has offered $31 a share in stock and cash for Yahoo, which it valued at $44.6 billion when it announced its plans to take over the Internet portal. It has plainly stated that its goal is to catch up with Google, the hugely successful Internet search engine.

Microsoft says the combination of the two companies would realize $1 billion in cost savings and help both compete with Google. Murdoch said he'll stick with Google, which sells News Corp.'s search advertising.

"Microsoft feels they have to pay attention to Google," Murdoch said. "They're quite paranoid about it."

"We're very happy to be in the Google camp," he added. "They sell our search advertising and pay us royal for it."

Source: San Jose Mercury News

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