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In AOL's Eyes, How Could Yahoo Look Better Than Time Warner?

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HISTORY REPEATING
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Like a stale VH1 television format, let's all take a look back at what life was like in 2000.

We mourned the loss of Malcom & Eddie. We learned that volleyballs make excellent companions in dire situations. And we thought that one woman in Destiny's Child really had something.

But above all, we cowered at the prospects of Time Warner joining forces with AOL -- a partnership bound to create huge ripples in both the media and technology sectors of which no one could avoid. This conglomeration of money and power would influence everything from newspapers to websites to email to life. There was no stopping AOL Time Warner or the mighty golden fist it wielded.

Well, we all know how that ended: We were wrong. And not just about Malcom & Eddie.

Cut to ten years later. Google, Amazon, Apple, and eBay have risen from the tech bubble's ashes. But we have a brand new independent AOL -- one that's a fraction of its former self. It's not as big, not as powerful, and certainly not as profitable. And concurrently, we have Yahoo. Like AOL, it's not as big or as powerful as it once was, and it's also struggling to figure out just what exactly it can do.

And like two overweight friends who aren't so successful in the looks department, people are inclined to set them up.

Speaking with anonymous sources close to matter, Reuters reported today that AOL is exploring a breakup of the company and a merger with Yahoo. Of course, this wouldn't be the first time such merger rumors abound. AOL and Yahoo just seem to be a perfect fit for one another.

But the chances of such a partnership succeeding hearkens back to January 2000 when Steve Case shook hands with Jerry Levin. More accurately, it reminds us of a few years later when we saw what a massive debacle it turned out to be.

The fact that a partnership between AOL and Yahoo "just makes sense" is the very reason why it wouldn't work. Neither party offers anything relatively different to the table or is entirely successful with its execution -- hence the merger.

AOL is experimenting with original ad-supported content and watching its dialup business -- still a surprisingly huge moneymaker -- steadily drip dry. Yahoo remains focused on portals and trying to cut back on the incessant and fruitless spending it had been doing for years. But despite the somewhat contrasting business models, both companies are ailing animals -- no matter how much rebranding or succinct descriptions have to offer.

There hasn't been any confirmation from either camp, but in their best interests, they should be seeking out a different half to the whole. A partner that could offer something either party cannot. A peanut butter for the jelly.

Otherwise, it's just more of the uninteresting, overinflated same.

A yin and yang -- both gray, indistinct, and lifeless.
POSITION:  No positions in stocks mentioned.
TAGS:  YAHOO, BUYOUT, MERGER, AOL, MORE OF THE SAME    SOURCE:   Reuters

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