AOL and Yahoo: It Could Work, But It’s A Long Shot

Posted: November 10, 2010 in Content, Convergence

The rumors around AOL’s interest in merging with Yahoo make this as good a time as any to remind everyone just how badly most mergers go. AOL has already participated in one of the storied merger disasters of all time, and Yahoo has had some historic failures itself, with one of the side effects the creation of the maelstrom formerly known as Mark Cuban.

So let’s take a quick look at what some of the good news and the bad news could be in bringing these two together.

Good) They are both headed in the same direction, which is to become content businesses with huge audiences.

Bad) They are both still losing audience and marketshare.

Good) Both management teams have holes, and they could compliment each other by putting the businesses together. They could both build content together.

Bad) Neither of them has shown the ability to hired the necessary creative talent to head up content creation and content products. They are spending like crazy to bring in content creators, but neither company has elevated the concept of Chief Content Officer to the very top of the company.

Good) AOL would increase its audience by as much as 88% in a merger, according to an analysis by Comscore. But the larger Yahoo would only see its reach increase by 10%.

Bad) Yahoo’s advertising machine has slowed down for the first time in a while, at the very time AOL advertising has also decided to drop.

Good) Tim Armstrong is a strong Ad exec, and knows his new enemy.

Really Good) Together, the two would have larger reach in the US than Google, 197 million to 180 million.

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