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 After Peter Chernin ruled himself out, ex Vodafone (NYSE: VOD) chief Arun Sarin said no and former AOL (NYSE: TWX) topper Jon Miller supposedly did same, someone seems to be reassuring WSJ.com - Yahoo (NSDQ: YHOO) is close to naming its new CEO, and could do so as soon as next week. Carol Bartz, ex CEO of design software maker Autodesk, is "on the list", according to unidentified sources. Yahoo wants to name the eventual winner, whomever he or she may be, before announcing Q4 earnings on January 27, the thinking goes, though it's said the board hasn't yet offered the job to anyone and drawing up a contract could take weeks. It's unclear whether Yahoo is really close to making an appointment or whether someone is just trying to calm nerves ahead of those results.
Bartz, whose former business (she still chairs the board) is best known for its stuffy but useful architecture and engineering design package, would represent a shift for a Yahoo once run by Hollywood bigwig Terry Semel. But having been been a Sun Microsystems VP, sitting on the boards of Intel (NSDQ: INTC), Cisco (NSDQ: CSCO) and Sunnyvale-based backup service NetApp, she may bring an understanding for technology that could help reboot Yahoo's innovation compass. She was also appointed to President Bush's Council of Advisors on Science and Technology and is a computer science grad. As WSJ.com points out, former Yahoo CEO Jerry Yang and president Susan Decker also sit around the board tables of Cisco and Intel respectively with Bartz.
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 An unspecified group of investors is gearing up for a buyout offer—all with financing from Microsoft, reports TechCrunch, citing unidentified sources. The buyout terms call for $13 per share, which would value Yahoo (NSDQ: YHOO) at around $20 billion. By way of perspective, MSFT offered to buy Yahoo early last February for $31 per share, and in May, upped its offer to $33, before ultimately being rejected. Since then, Yahoo's fortunes have taken a turn for the worse, as the financial markets melted this past fall.
As for what would happen if the takeover succeeds, TechCrunch's sources claim they would try to convince former Yahoo staffers to return after installing a new executive team. They also say that this deal would leave Yahoo standing independently, though it would still be tightly connected to Microsoft (NSDQ: MSFT). A Yahoo rep had no comment on the TechCrunch report, and Microsoft reps were unavailable.
This latest turn in the never-ending MSFT-YHOO takeover saga follows a report at the end of November that said Microsoft was putting together a deal that would ultimately net it Yahoo's search business for $20 billion. That rumor involved Velocity Investment Group founders Jonathan Miller and Ross Levinsohn taking control of a new Yahoo new search division with a promise to match MSFT's funding with $5 billion from external investors. Levinsohn, however, denied there was any truth to it.
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 Here are two related items from the Consumer Electronics Show (CES) about efforts to offer greater connection between the web and the living room:
—Yahoo creates 'widget engine' for Samsung: Samsung and Yahoo (NSDQ: YHOO) are working on a web-based content service to be released this spring. Yahoo has created a "widget engine" for Samsung HDTVs, which will allow viewers to check out Yahoo sites like Flickr, Yahoo News and Yahoo Finance, as well as outside interactive content from USA Today, YouTube, Showtime Networks, and others. The interactive service will be available on sets sold in 13 countries including the U.S., U.K., Mexico, France, Spain and Germany. Release
—LG unveils broadband HDTVs: Yahoo's widget engine will also power LG (SEO: 066570) Electronics' NetCast Entertainment Access HDTV feature. In addition to Yahoo, LG also has deals with YouTube and Netflix (NSDQ: NFLX). Recognizing that users aren't going to jettison their PCs entirely, consumers will also be able to connect their NetCast-equipped HDTVs into a home network to access JPEG photos or MP3 music files stored on their computer to create slide shows and listen to music on their big screen. Release
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 Velocity Interactive Group's Jon Miller is not trying to acquire Yahoo (NSDQ: YHOO), nor is he a candidate to replace Jerry Yang as CEO, Bloomberg reports, citing unidentified sources. Miller declined to comment on either point in an interview with Bloomberg. Earlier this month, activist investor and Yahoo director Carl Icahn said he had talked to Miller about plans that the former AOL (NYSE: TWX) CEO was raising money for an acquisition of Yahoo either in whole or in parts. Icahn said he told Miller that this was not a good time for any sale, as he felt Yahoo's stock, which was trading around $11.35 at the time—as of yesterday, it was up to $13.36—remains undervalued.
The word that Miller may be out of the running comes a day after Arun Sarin, the former CEO of telecom Vodafone (NYSE: VOD), was said to have done an about face on showing interest on going for the CEO post. Sarin's change of heart may have been prompted by what would appear to be a better job offer to join private equity firm Kohlberg Kravis Roberts as a partner.
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Yahoo (NSDQ: YHOO), perhaps hoping to get the focus off its finances and CEO search, will reduce the amount of time it holds on to user data to three months from just over a year. After that period, Yahoo will "anonymize" user log data within 90 days with limited exceptions for fraud, security and legal obligations. The Sunnyvale, CA-based company is also expanding its privacy policy beyond search log data to include info on pageviews, page clicks, ad views and ad clicks.
Back in August, with an eye to mollifying Congress and state legislators who were taking a harder look at online privacy and behavioral advertising, Yahoo said it was broadening "opt-out" controls covering targeted ads across its portal. Yahoo offered up the new tools as part of its response to a Congressional inquiry about ad targeting sent to 33 companies, including AOL (NYSE: TWX), Google (NSDQ: GOOG), Microsoft (NSDQ: MSFT) as well as internet service providers like Cablevision (NYSE: CVC), Cox Communications and Charter Communications (NSDQ: CHTR), from the House Energy and Commerce Committee. In September 2007, Google said it would discard user data after nine months. With a new administration and Congress taking office next month, Yahoo's move will increase the existing pressure on the other companies to match it on privacy controls. Release
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Last week, we reported that Arun Sarin was showing strong interest in Yahoo's now-available CEO position, and this morning we reported that private equity firm Kohlberg Kravis Roberts has asked him to join as a partner. Now what's the word? The Financial Times says the former Vodafone chief is no longer interested in succeeding Jerry Yang, partly because of the possibility of Yahoo (NSDQ: YHOO) being dismembered. Sarin is instead exploring other options, such as the post with KKR. Peter Chernin, president and COO of News Corp., expressed disinterest earlier this month and is still working out his contract with News, which is set to expire in June. Whose name will be floated next?
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Arun Sarin's name is being floated again, this time for a job at private equity firm Kohlberg Kravis Roberts. Last week, reports surfaced that the ex-Vodafone (NYSE: VOD) chief executive, who left the telecoms giant in July, was being considered for the role of ceo of Yahoo (NSDQ: YHOO). Now the Telegraph.co.uk is reporting, without citing a source, KKR has asked him to join the company as a partner. Sarin is no stranger to the firm. Before joining Vodafone from 2001-2003, Sarin was CEO of Accel-KKR Telecom, a joint venture looking specifically for investments in the telecoms sector.
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
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Congress has failed to pass legislation regarding so-called "Net Neutrality," and now the issue is again top of mind as Internet providers seeking preferential treatment; network operators considering a tiered approach, and once-staunch defenders beginning to soften their stance on the matter. This time, it appears Google (NSDQ: GOOG), which has been traditional a huge advocate of network equality and openness, is working behind the scenes with major cable and phone companies to get its Internet traffic prioritized, according to documents reviewed by The Wall Street Journal.
In essence, network neutrality means that cable and phone companies must treat all content crossing its lines equally, much like how phone companies today do not prioritize one phone call over another. Many supporters claim that this the secret to the internet's success—if it was divided, only rich companies could participate, and new entrants would never have a chance. For consumers, network operators, like Comcast (NSDQ: CMCSA) or Time Warner (NYSE: TWX), would be able to control content distribution, or even promote their services over another. But now, the counter-argument is starting to pick up steam. Network providers maintain that as internet traffic grows by more than 50 percent annually—by some accounts—content companies should share in the costs.
Any potential tiered deal will be faced with a landslide of criticism, but the WSJ suggests that even some of the most hardcore neutrality fans are fading. For instance, Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO), which formed a coalition two years ago to protect network neutrality, have quietly left, and are now dealing directly with operators. Microsoft provides software to AT&T's Internet TV service, U-verse, and Yahoo has a DSL partnership with AT&T (NYSE: T). In addition, the WSJ reports that prominent scholars, some of whom have advised President-elect Barack Obama on technology issues, are also softening their views.
The matter will likely become a political one quickly, and will test incoming president Barack Obama on the subject. The WSJ said the issue could regain momentum quickly. It recalled that in approving AT&T's 2006 acquisition of Bell South, the FCC made AT&T agree to shelve plans for a "fast lane," or tiered service, for 30 months; that expires in the middle of next year. Plus, a Democratic lawmaker has already promised new network-neutrality legislation early in 2009, and a new chairman of the FCC could take a stricter position on enforcement. It appears the only thing holding Google back from signing a deal is the government's threat. One major cable operator, who is in talks with Google, told the WSJ: "If we did this, Washington would be on fire."
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
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 Updated: Looking for clarity when it comes to Time Warner (NYSE: TWX) and AOL? Maybe you should stop reading here—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 was 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?
-- Elephant stomp: Bewkes was frank about discussing alternatives with Google (NSDQ: GOOG), its current search partner and stakeholder, Microsoft (NSDQ: MSFT) and Yahoo; after all, as he said, it's in the paper every two days. "We need to assess—as does any of those three counterparties—what would be the improvement to economics of making either a commercial or a merger arrangement with pieces of AOL? From our side, is the result reasonably as good or better than what we can do operating it, spinning it or taking certain pieces of it and letting those go into combinations with one of those other three companies." He laughed, "You have some very big elephants walking around in the forest."
More on a possible spinoff and AOL Access after the jump
-- SpinCo? Bourkoff, who is on the banking side of UBS, asked if it was simpler to spin off AOL Audience to shareholders and "have that noise sort of go away from strategic thinking and have that growth highlighted as a public vehicle instead of part of Time Warner?" Bewkes replied wryly: "You know, we never think about what's easier. We just think about what will provide the most resources to that enterprise and if it was separate focus, maybe that would be the right answer."
-- The content option: During the Q&A, Bewkes made a point of mentioning how AOL fits in Time Warner as a content business, adding, "that doesn't mean we have a religious view of having to operate it. we will do whatever creates the best value realization." After the session, I asked Bewkes about one possibility: keeping the content from AOL. (Given the recent re-org of Time Inc, it could even fit in there, especially the new products AOL has been more successful with online content launches then its print/digital sibling. The competing verticals would be more of a challenge.) His reply: "It's consistent in the way that it operates with the way CNN operates. It creates digital pages and it sells ads for them. They are branded pages on AOL News, AOL Finance, Mapquest, etc. That's no different, really, than CNN having a page. You don't need ... if the question is do you have to have AOL to operate CNN Digital, no, you don't." Would he like to keep AOL's content? "AOL's content is growing in audience and ad sales and we're happy that that's the case. We said at great length we might or might not combine that to get it to be more valuable with somebody else."
-- AOL Access: As for the access business: "AOL Access produces a lot of earnings and cash flow—it's just declining earnings and cash flow." Bewkes says it still beats most of the external models he sees in those areas. But "it's a declining model, difficult for big public stock portfolios to handle."
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 Classified ads continue to be battered online and off, hence, newspaper companies have been singing the praises of their online partners this week at the UBS Global Media and Communications (PDF) conference. Earlier on Wednesday, Gannett (NYSE: GCI) praised CareerBuilder for supplying 80 percent of its interactive revenues for Q4; then, this afternoon, Media General (NYSE: MEG) and E.W. Scripps (NYSE: SSP) positively gushed about the Yahoo (NSDQ: YHOO) Newspaper Consortium. Rolling out APT is one of the few things the companies are looking to next year for.
-- Thanks, Yahoo: Media Gen's Reid Ashe, EVP/COO, said the Richmond, VA-based company expects to realize $7 million from its partnership with Yahoo Hot Jobs by the end of this year. Separately, Media Gen's ability to sell targeted ads in four markets through Yahoo netted over the publisher about $1 million. As a result, local online display ads are up 40 percent year-to-date—a growth rate that has become quite rare in online advertising these days. Overall, Yahoo classified currently makes up 15 percent of total revs. It will begin setting up ad targeting with Yahoo's APT through its own sites in April. Still, Yahoo isn't the only game in town, as Media Gen is also upselling ads on Zillow in 13 markets, and will create a co-branded real estate site—similar to its deal with Hot Jobs—next year. While that sounds well and good, the companies are nevertheless nervous about how the recession will ultimately impact these programs, not to mention the chaos currently engulfing Yahoo.
More after the jump…
-- Making history: As an early participant in the Yahoo Newspaper Consortium, Rich Boehne, E.W. Scripps' president and CEO, was positively rhapsodic about Yahoo. "The newspaper consortium represents the best example of the newspaper industry coming together in its history. About 20 years from now, we'll look back on the formation of the newspaper consortium as a turning point for newspapers. It will serve as a model for other kinds of consolidation of costs." Boehne added that he would like to see local TV station heads form a similar collaborative effort to get video and content to mobile. "You need a Yahoo-like consortium structure to get everyone to agree to a single platform." As for APT, Tim Stautberg, the company's CFO, said E.W. Scripps is still testing the service and expects to will be rolled out across all its papers by February.
Photo Credit: Alex Barth
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 As Yahoo's 1,500 or so layoffs are happening today (see the layoffs BB site SAI for wall-to-wall coverage), more such reductions may be coming soon, the company warns. According to a Yahoo (NSDQ: YHOO) spokesperson quoted in NYT: "There could be additional staff reductions next year...It depends on the decisions we make about prioritization, and on things we can't predict in the economy."
Along with the layoffs, it is closing offices in Dusseldorf, Hamburg, Stockholm, Amsterdam, Oslo, and Copenhagen, and next year, similar closures will be made at smaller offices in U.S. and Asia, the company said.
And coming soon: more product closures. For now, the layoffs are cost-reduction, but as the spokesperson helpfully explains, the "Business prioritization will continue going forward. We are looking at businesses we may put into maintenance mode." Yahoo in maintenance mode...now that's a new rallying cry for the new CEO, for sure.
Meanwhile, Jerry Yang's farewell note, sent out today to employees, is here. Likely his last lower-case ditties for a while. ...
Staci adds: Yahoo has changed its severance package for top execs again, according to an SEC filing this afternoon. That would be the same plan changed in February. Still going through the fine print but the plan, which covers all full-time employees, includes cutting in half the two-year eligibility for severance after a change in control.
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Yahoo (NSDQ: YHOO) investor Ivory Investment Management went public today with a plea to the board to sell the search business to Microsoft (NSDQ: MSFT) for what it estimates could be $15 billion upfront. MarketWatch reports that Ivory, which owns a 1.5 percent stake in Yahoo, issued an open letter to the board urging it to salvage the deal with Microsoft "and not miss another value maximization opportunity." Ivory's proposal sounds familiar: sell search to Microsoft and then make Microsoft Yahoo's search partner. From the letter: "We believe a search deal with Microsoft could deliver value to Yahoo shareholders of $24-29 per share, or more than double yesterday's closing price of $12.19."
Update: MarketWatch has updated the story with more detail. Ivory suggests that combining the two would save $800 million in duplicate costs and that a single unit could increase revenues by at least 20 percent or $500 million a year. On its reasoning: "On an after-tax basis, the $15 billion payment from Microsoft would be $9 billion for Yahoo shareholders, leaving Yahoo with $21.2 billion of cash and investments (up from $12.2 billion today) and annual EBITDA of $2.4 billion (up from the midpoint of current guidance of $1.9 billion). Applying a 5x EBITDA multiple on the "new Yahoo" would result in a value of $24 per share. If Yahoo were to go a step further and deploy the $9 billion in new cash for its own shares at a $16 offer price, it could reduce its share count by 40% which would leave the remaining shareholders with a stock approaching $30 per share (amazingly close to the original bona fide bid from Microsoft)."
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Arun Sarin, the former head of Vodafone (NYSE: VOD), is showing strong interest in succeeding Jerry Yang as Yahoo's CEO, according to The Financial Times, which quotes people who are close to Sarin. Yesterday, the WSJ reported that Sarin's name was the latest being floated for the job. The FT's sources stressed that Sarin has not made a decision on whether to join Yahoo (NSDQ: YHOO), and is considering other alternatives, including chairing Yahoo's board, or joining a private equity firm. A Yahoo official in the story said it is premature to speculate on who Yang's successor might be, while an unofficial source close to Yahoo said the company has not made any offers yet.
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So say a number of reports: this is the 1500 job cuts announced in October, and even though the situation has worsened since then, no major additional cuts have been added to the list. The cuts are across the board, but HR and finance will take a major hit. Some major products may be shut down as well, as a result, though no word to employees about it yet. Meanwhile, the quest for new CEO continues and the drum beats louder for a quick replacement to Yang…
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
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 Taking the podium from AH Belo's Robert Decherd, McClatchy (NYSE: MNI) Company Chairman and CEO Gary Pruitt opened his presentation at the UBS Global Media and Communications (PDF) conference by noting that total ad revenues through October are down 17.4 percent and a large portion of that is not coming back. Looking ahead, Pruitt didn't sugarcoat it, "Our current results are lousy and the economy is worsening. 2009 will start ugly, but we expect it to improve." And with over $2 billion in debt—Pruitt insisted that it is steadily being reduced.
-- Online is still a bright spot, with digital revenues through October rising 10.4 percent. The fastest growing category is retail, and the area that Yahoo (NSDQ: YHOO) helps the most. We've only seen a small amount of Yahoo revenue and we don't expect it to really make a difference until 2010. Chris Hendricks, VP, interactive media, added that the Yahoo partnership has contributed $3.2 million in ad sales to date. "We're in only seven markets with Yahoo and so the partnership is still small, but the growth we expect next year is being put in place." Moving away from print upsells, as AH Belo's Decherd mentioned, is a major focus as the company builds up an independent online ad sales force. Hendricks said that half of the company's online ads are not related to the print side. The company online-only ad sales have grown 26.9 percent and now represents 12.2 percent of its ad revenues, up from 8.6 percent in 2007. Afterward, Pruitt told me that that the goal is to achive a balance between print upsells and online ads. "It's not an either/or. Our basic policy is to the let the advertiser make that call." More after the jump.
-- An "Obscene" dividend: Asked to comment on what one attendee described as the company's "obscene dividend," Pruitt quipped, "I guess you know it when you see it," adding, "We have halved our dividend and if our leverage ratio is over 5x, that could eliminate the dividend. But we aren't at that point." Pruitt also outlined some of the cost containment measures McClatchy has taken this year, such as
reducing staff by 20 percent or 2,550 jobs.
-- Asked about a report that McClatchy is considering putting a "for sale" sign on The Miami Herald, which was featured prominently on one of the presentation slides, Pruitt said he wouldn't have a comment. On his way out, BusinessWeek's Jon Fine asked, "Not even a wink on Miami Herald?" Pruitt responded, "Not even a twinkle."
-- In a conversation after his presentation, I asked Pruitt for his thoughts about Tribune Company filing for bankruptcy and if this would cause him to reevaluate its work with the Chicago publisher, such as the McClatchy-Tribune Information Services and CareerBuilder. "First off, we are in a very different situation [from Tribune] so we're not facing anything close to what they have been. Secondly, we will continue to work with them and it will not affect our partnerships. Lastly, I was disappointed about the bankruptcy filing, but that's all I can say."
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
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