RENEE MONTAGNE, Host:
Forty-five billion dollars is a lot of money, but it's not enough to make Yahoo executives excited about selling their company - to Microsoft, at least. Yahoo CEO Jerry Yang is looking for alternatives to the Microsoft offer. The problem is, there aren't any, at least at the moment. Yesterday, Rupert Murdoch made it clear his company, Newscorp, will not make an offer.
STEVE INSKEEP, Host:
Analysts do not see any other logical candidates like AT or Comcast stepping up to the plate, either. Microsoft is trying to buy Yahoo in order to grab a larger share of the search and advertising business from Google. But there are other reasons Microsoft wants Yahoo, as NPR's Laura Sydell reports.
LAURA SYDELL: It's clear what Google is about just from a visit to its home page. It's almost blank except for a box for search terms. In contrast, the Yahoo homepage is a smorgasbord of services - personals, games, jobs.
MONTAGNE: To lots of content areas ranging from technology and cars and finance to food. And then all the entertainment areas, like movies and music.
SYDELL: That's Charlene Lee, analyst with Forrester Research. There are also the popular properties that don't have the Yahoo name, but which are owned by the company, such as the photo site Flickr and the social bookmarking site Del.icio.us. And both Microsoft and Yahoo have extremely popular email services.
MONTAGNE: Where the two together will represent a vast, vast majority. I think it's like 90 or 95 percent of those markets will be owned by them.
SYDELL: But Robert Leighton, a former Justice Department antitrust official, says the government won't look at past behavior. They will only look at what a merger would do to market share. Leighton says any decision involving email or IM will depend on whether officials separate them out from other online services.
MONTAGNE: Once you decide the relevant market or define it, a lot of things fall out from that, because you know how concentrated the market is to begin with and if the merger will make it more concentrated.
SYDELL: Leighton says if Justice Department officials see Myspace, LiveJournal, LinkedIn, or any number of networking sites as part of the market that includes email and IM, then a Microsoft/Yahoo merger wouldn't seem threatening. Yousef Medi, who oversees large-scale mergers at Microsoft, thinks the future of these services is in such flux that it would be hard to define it as a closed market at this point.
MONTAGNE: Across email and instant messaging and social networking, text messaging, more services, etc., there is a broad set of services out there that are going to evolve over time.
SYDELL: Medi says Microsoft believes that these services will offer new ways of making money online in the future, especially when their properties are combined with Yahoo's. Analyst Charlene Lee agrees.
MONTAGNE: If I bought shoes on Zappos.com, I could tell my girlfriends about it on Myspace or Facebook, or put up photos on Flickr or bookmark those things on Del.icio.us. Those are new activities that represent marketing opportunities.
SYDELL: So while Microsoft is still most interested in getting some of that online search advertising revenue away from Google, all the other properties that it would gain from a merger with Yahoo make the potential deal look even sweeter. Laura Sydell, NPR News, San Francisco.
INSKEEP: Now Microsoft has to find a sweet loan. Seems the company does not have quite enough cash, or rather, Microsoft does not want to use all of its billions and billions of dollars in cash on hand, which is what buying Yahoo would do. So for the first time in its history, this incredibly rich company says it may borrow money. Most likely, it would issue bonds.
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