Well, today we seen one consequence of Microsoft slow-playing a strong hand: the long-rumored discussions between Yahoo and News Corp (such talks have been mentioned here, as well as at SAI and TechCrunch) have heated up and gotten newly serious.
The discussions allegedly center on Yahoo combining with News Corp.’s net properties, especially MySpace, facilitated by a mix of cash and private equity money, all of which hinges on how to value MySpace.
Assuming these discussions don’t break down (again), there are now three things that can happen (with attached Paul probabilities):
- Microsoft ups its offer to $36+ and seals the deal. P: 55%
- Yahoo closes a deal with News Corp., and Microsoft doesn’t contest it via a proxy battle. P: 15%
- Yahoo closes a deal with News Corp., and Microsoft contests it via a proxy battle. P: 30%
I don’t see another option. Microsoft is not going to walk away, so that’s not in the cards. And I just don’t see anyone else appearing on the scene at what will soon be rapidly escalating prices. Did I mention I would love to see Option 3? Well, I would. While it’s uneconomic and a waste, it would be far and away the most fun.