AOL-Yahoo Merger: Not Happening.

I just don’t see this AOL-Yahoo merger happening.  It may make sense from several perspectives which all stem from the fact they are both in essentially the same businesses.  However, in the end this merger would not benefit either company.  In fact, I believe it would hurt them.  Most significantly, I believe the merger would slow down the progress AOL has been making in the recent months.

While AOL-Yahoo will be busy restructuring (yet again), firing people, and integrating with one another, everyone else in the space will be progressing.  Meanwhile, AOL-Yahoo will not be, they would essentially be in a stand-still for a while.  Neither of them can afford to be in that situation.

I should also point out that AOL has yet to even speak to Yahoo about this potential deal.  I don’t see Bartz going for it, I think she would rather take Yahoo private before even considering a deal like this one.  The news of a possible merger did boost Yahoo’s stock price today, it’s up just over 5% in after hours trading, but I personally don’t expect investors excitement to last very long, especially once the dreams of such a deal are crushed.

To a certain extent, I would equate a merger of this kind (AOL-Yahoo) to that of NBC merging with CBS or any other major broadcast network.  These two companies overlap in several areas.  I can see why some people would think it was a great idea.  However, aside from the leverage it would give them for advertisers, I don’t see why they need each other or how it would truly benefit either of them.  Scale isn’t everything here.

Personally, I would love to see these two companies competing and innovating in the content and advertising space – but independently, not as one.

What are your thoughts on this potential AOL-Yahoo merger?  A good idea or not?