AOL CEO Tim Armstrong may have an unorthodox solution to Yahoo's recent leadership troubles: himself.
Bloomberg's Brett Pulley and Douglas MacMillan report that Armstrong is engaged in discussion with Yahoo advisers at Allen & Co. about combining the two companies and making Armstrong CEO of a AOL-Yahoo online media juggernaut. Bloomberg cites "two people familiar with the matter."
This is a spectacularly crazy idea for several reasons:
- AOL’s market value is about $1.6 billion, while Yahoo’s is about $18.2 billion.
- AOL and Yahoo tried this dance a year ago. And three years ago. Each time, cooler heads strapped smelling salts around their necks, muttered "wait, why are we doing this?" and walked away.
- Yahoo's revenues are declining, which is why its board fired Carol Bartz. But AOL's revenues are declining even more, and have been for what seems like forever. It's a great success when AOL revenue decline slows down.
- Even if Armstrong had been massaging revenue out of AOL like a skilled dairy farmer and a third of all Epicenter articles this week were grappling with Patch as the inevitable future of news, he would still look like a less-than-stellar choice to manage a wide range of semi-autonomous media companies after his bungled handling of the past week's Crunchfund fiasco.
- AOL merging with Yahoo offers neither any solution to the long-term problems both companies face in reorganizing themselves, jettisoning parts of their companies that financially or culturally don't work any more and rebuilding value around those parts that do.
It's not even a punt. I don't know what it is. Sports and pop culture metaphors are both failing me.
So I think we have to ascribe this to one of three things:
- A very bad idea from one or both of two companies who seem to have no shortage of bad ideas lately;
- Somebody floating a useful rumor that shakes things up a little bit M&A-wise and drives both companies towards their preferred outcome (whatever that might be);
- Something else, a partnership, partial acquisition or property swap that heaven forfend, might even make some sense.
We'll be continuing to monitor this, but don't count on a last, doomed alliance of Elves and Men being announced any time soon. (Aha! There's the metaphor I was looking for.)
Update: CNBC's reporting that Yahoo has no interest in a deal with AOL. Thank goodness for that.
See Also:- Gossip Folks: A Fierce Fight for What’s Left of Yahoo
