Murdoch and Gates to clash over Yahoo?

Rupert Murdoch's News Corp is said to be considering a deal with Yahoo. A classic spoiler move?

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Last Updated: 31 Aug 2010

It's certainly one that will raise Bill Gates’ blood pressure a few notches. In the rumoured deal Yahoo would soak up News Corp's web interests, including MySpace, with Murdoch’s outfit taking 20% of its shares. The appeal is obvious as far as Yahoo is concerned - it would remain independent and not have to succumb to the hostile takeover bid from Bill Gates’ Microsoft, which recently offered more than $40bn for the company in an attempt to bolster its online challenge to Google.

Yahoo CEO Jerry Yang has so far resisted the offer from the Gates mob, arguing that it undervalues the brand and that Yahoo is ‘a faster-moving, better-organized, more nimble company than it was just a few months ago’. Which wouldn’t be difficult. Yahoo has suffered eight declining quarters of profitability and shrinking market share, and is lagging far behind industry leader Google in the lucrative field of online advertising.

A possible News Corp deal would provide some breathing space for the Yahoo chief, who has come under pressure from shareholders for not accepting Microsoft’s offer. But it would hardly solve his company’s problems, in terms of gaining ground on Google. That will of course be academic for Murdoch, who is well known for going in for companies for which he has little use, in order to stop others gaining a competitive advantage. Ask not what Yahoo can do for him – ask what he can gain from Microsoft not getting a leg up.

The speed of the deal also suggests the hand of Murdoch heir James in the company’s affairs. The 'Dirty Digger' himself has hardly shown a strong understanding of the virtual world, and is certainly yet to match the Midas touch he has shown with TV and papers. Take his 2005 swoop for MySpace - the price tag of $580m raised a few eyebrows, and it has since been usurped in the fad stakes by Facebook and other social networking sites. As such it has suffered the same problem as many other web pioneers - Yahoo being the prime example.

Of course it all sets the scene for an engrossing clash of the media titans – with Murdoch squaring off against Gates for the right to a final showdown with the mighty Google. Whatever happens, it should be fun to watch.

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