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Time Warner Reaps $9.25B From Cable Split
Executives at Time Warner concerned with how to spin out its Time Warner Cable division seem to believe that saddling a cash-generating business in an increasingly competitive market with a lot of debt is good. It’s good for Time Warner Cable shareholders (including Time Warner), who will get a $10.27 per share dividend, but it’s kind of like penalizing a wage-earning kid by charging him a giant fee before he leaves the nest. However, it should help the parent company placate shareholders and shore up reserves while it figures out what the heck it’s doing on the content side.
Yahoo, Google, AOL Strike a Pose for Microsoft
Update: The Wall Street Journal reports that Yahoo and Google are going to work together on an experiment that might lead to big things. In other words, a two-week test that is limited to Yahoo’s U.S. traffic will carry Google ads. These ads will be limited to “no more than 3% of Yahoo’s Web search queries.” If all goes well, then a broader search outsourcing arrangement could be struck by the two companies.
Loose translation: With its bid for Yahoo, Microsoft made a checkmate move. Yahoo is out of suitors. Its shareholders don’t give it a prayer of a chance, and further more, the company is still as listless as it was six months ago. So what does it do? It goes and sleeps with the enemy!
Just a reminder of Yahoo’s cluelessness: In 2000, it outsourced its search queries to Google. It renewed the deal in 2002, and has become a minor player in the search business. Anyway, about this new-found friendship, I wonder if the U.S. government is going to let this one through. I mean, this is one instance in which antitrust concerns could actually hold some merit.
Microsoft is pretty clear about its position. As Brad Smith, Microsoft’s General Counsel, told the WSJ:
“Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo!”
Either way, in this deal, heads or tails, Google comes away a winner. If Yahoo goes to Microsoft, the ensuing chaos is going to benefit Google. If Yahoo gives away its search ad business, Google is a winner.
Update: The Wall Street Journal is reporting that Yahoo and Time Warner are planning on putting together a deal where Yahoo will get AOL which is being valued at $10 billion. In exchange Time Warner will get 20% of the combined company (Yahoo) and will make a cash investment. Google will be the search-ad-partner. Yahoo would spend the money it gets from Time Warner $10 billion buying back its own stock and beating down Microsoft. With Legg Mason, 7% owner of Yahoo opposing the Microsoft offer, the new plan could work. To make this plan come apart at seams unravel, Microsoft has to up the offer by a few dollars per share. I say this again, Yahoo has some serious problems. Buying AOL, already troubled in its own right, is only going to compound problems.
LaunchBox Digital Set to Launch
LaunchBox Digital, an early-stage investment firm founded by three tech industry veterans and with an initial focus on web and mobile businesses, is due to be unveiled Thursday, we’ve learned. The Washington, D.C.-based company will provide between six and 10 entrepreneurs seed investment and help in incorporation through an intensive, 12-week program, during which time they’ll be able to draw on the advice and experiences of the firm’s founders and advisors as they develop a prototype or demo and craft their business plans.
At the end of the program, known as LaunchBox08, the entrepreneurs will be given an opportunity to present their businesses to VCs and other investors, strategic partners and others.
The founders of LaunchBox Digital are Julius Genachowski, formerly chief of business ops at IAC/InterActive (IACI); Sean Greene, founder and ex-CEO of The Away Network; and John McKinley, who served as president of digital services and CTO of AOL (TWX).
The company will begin accepting applications for LaunchBox08 immediately. LaunchBox Digital will also accept proposals from early-stage business for immediate seed or angel investment.
Hulu, NBC-News Corp Online Service Launches
The long-awaited and much-derided NBC (GE) and News Corp (NWS) joint venture Hulu will make a somewhat public debut this week, opening up a private beta tonight of its web video service and initiating distribution of its movies, TV shows, and mashups on AOL (TWX), Comcast (CMCSA), MSN (MSFT), MySpace, and Yahoo (YHOO). Full report on NewTeeVee.com. Will it be able to beat YouTube and other players in the online video portal game? Take our poll (below the fold)
Related & Previous Coverage of Hulu: Big Media vs YouTube & Google: Smart or Not. Also: NBC confirms pulling YouTube content for Hulu and No more NBC shows on iTunes Mad Money & Battle For The 10th Spot NewCo now has new CEO Is NewCo really worth a billion dollars? NewCo: Nuts & Bolts from an Insider.
AOL to Cut 2,000 Employees, 20% of Work Force
Kara Swisher got her hands on a memo sent out to AOL (TWX) employees earlier today from CEO Randy Falco. Here is a summary of what it says:
- The focus is advertising and the new venture, Platform-A.
- New web-based properties, including super-hot TMZ.com, are the focus; he calls it the “publishing business.”
- Not giving up on Access business just yet because it “continues to be profitable, providing us cash flow to invest in other areas of the business.”
- They will cut 2,000 employees, roughly 20 percent of their total work force.
Put simply, my vision for AOL is to build the largest and most sophisticated global advertising network while we grow the size and engagement of our worldwide audience.
Clearly a Black Monday out in AOL-land, and since I have a lot of friends who work there, this is not an easy bit of news to report. Still, AOL needs to do some housecleaning in order to streamline its operations. I wonder, though, despite all the talk about being able to compete in the advertising business, if AOL really has what it takes to duke it out with more motivated rivals like Microsoft (MSFT), Yahoo (YHOO) and of course, big daddy Google (GOOG).
Update: Oracle Wants to Buy BEA Systems, BEA Wants More Money
Oracle (ORCL) continues on its enterprise software roll-up strategy. Having already gobbled up dozens of companies including PeopleSoft, it now has plans to buy BEA Systems (BEAS), offering $17 a share, or about $6.7 billion. Oracle offer is 25 percent higher than BEA’s recent closing price. Update: BEA, however, says that’s not good enough.
BEA has been under pressure lately from Carl Icahn, a corporate raider-turned-white knight. Icahn recently campaigned for management changes at Motorola (MOT) and Time Warner (TWX). He has 13% stake in BEA, which according to Dealbook cost him $663 million. That’s worth $871 million, if Oracle gets its way. Or a whopping $208 million in profit for Icahn in less than a month. Now that’s a good life!
Stuart Williams, Senior Analyst, with Technology Business Research gives a thumbs up to the deal:
BEA is a technology-focused firm that should find a good home inside Oracle. Oracle owns the software stack below the BEA middleware (OS and database), around BEA’s offerings (the complete Oracle Fusion Middleware suite), and above BEA’s offerings (applications). Oracle can integrate the BEA technology directly into the core of the Oracle stack, strengthening it, while at the same time removing a competitor and adding close to $1.4 billion in annual revenue to its coffers. TBR believes the potential acquisition is a strong win for Oracle. BEA will help Oracle as the company gears up to combat IBM for the leadership position in the middleware market.
Britney, Euro iPhone, WiMAX in Japan, & AOL Dial-down
Britney Spears might have bombed at the MTV Video Awards, but she has proved to be da bomb for Viacom (VIAB), making visitors out of water cooler gossipers.
Will French, Brits and Germans fall for Apple’s (AAPL) iPhone? T-Mobile (Germany)and O2 (UK) think so, and Orange is hoping they will. And you want to know where they will launch next? Just look for places where EDGE networks are thriving.
Time Warner (TWX) is looking to sell AOL dial-up business and become a ad-supported company. Finally!
KDDI of Japan is starting a new company - Wireless Broadband Planning K.K. (WBPK) to bid on one of two WiMAX licenses in the 2.5Ghz band to be awarded by the Japanese regulator, the MIC, by end 2007. Intel Capital is an equity partner of KDDI. MIC doesn’t allow 3G license-holders to bid for a license. This is a workaround. Softbank and eAccess; NTT DoCoMo and ACCA Networks are other two teams in the race.
Despite the rise of legal P2P, it seems the TV networks are still wary of the technology. We looked for the shows and didn’t find much.
