They say, of fastly dropping markets, that one should never try to catch a falling knife. In trying to sell AOL, Time Warner could be letting a sharp blade fly at Yahoo, the most likely buyer for the troubled Internet business. Will a deal happen? If so, for how much? No one really knows, but everyone wants this clumsy mating dance to be over. Henry Blodget floated and then retracted a rumor that a deal was imminent, for something in the range of $8 billion to $10 billion.That sent Yahoo shares dropping twice as fast as the tech-heavy Nasdaq index, a sign of shareholders' displeasure at the idea of paying that much. 24/7 Wall Street thinks that anything more than $5 billion will be viewed as overpaying. Growth in AOL's advertising business is slowing dramatically, as the Internet-access business continues to decline. The only part of AOL that anyone seems interested in is its online-advertising network, born as Advertising.com and recently relabeled Platform-A; Yahoo, too, fancies itself an advertising broker, in imitation of Google's hugely successful AdSense program, which places ads on third-party sites and gives Google a cut of the resulting fees. AOL's Web-publishing businesses? The most-trafficked ones are duplicated by Yahoo's own, more successful media sites in area like sports, news, and finance. And then there's dial-up Internet access, a business no one seems to want. Liberty Media might flip its shares in Time Warner for the business, but only at a bargain price. Yahoo might take it in a package deal, to save the complication of a split, and try to trade the subscribers to someone like Verizon or AT&T in exchange for a long-term advertising deal. So who gets cut? Either Time Warner's shareholders, or Yahoo's, depending on the price that's paid. This deal seems likely to get done, if only because it becomes more embarrassing the longer it takes. But someone's going to end up with their fingers sliced.
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