Centro Acquires RealCities, Kills Network

Centro has acquired McClatchy’s RealCities, which now redirects to Centro.net. Kate Kaye at ClickZ has a nice overview of the background. Here is the key paragraph:

According to Centro Chairman and CEO Shawn Riegsecker, however, Centro isn’t buying the media properties available through the RealCities network. Instead, the firm is buying business relationships with agencies and advertisers currently working with RealCities. “We are not picking up the publisher contracts,” said Riegsecker. “We firmly believe that the network model is not the right model agencies are looking for.”

What this suggests is a big discount.

RealCities was conceptually on target but had ongoing execution challenges. As an ad network it has largely now been superseded by the Yahoo! newspaper consortium and the newspaper-owned quadrantOne. However there are a host of other local ad networks. Yet RealCities was one of the few local networks with reasonable scale, having swallowed the inventory of DotConnect Media, Lee Enterprises’ newspaper network in late 2007.

Terms of the deal weren’t disclosed. Here’s an email interview with Centro CEO Shawn Riegsecker I conducted after being alerted to the deal earlier this week:

Why did Centro buy Real Cities?

A: Real Cities has been a respected player for many years in the space. To be able to acquire this respected company and its existing base of more than 250 clients, while consolidating the industry on our one platform, and gaining McClatchy’s involvement and support for our media planning and buying platform – it all just made a lot of sense.

Did you come to believe you needed your own “inventory”?

A: Although we will be servicing Real Cities’ clients, we did not pick up their contracts with publishers. Centro will not own or be taking a stake in any inventory, we will remain an independent and objective resource for our agency partners. We have no intention of operating a network.

Does the acquisition affect Centro’s ability to work with other ad networks in any way?

A: No, we will continue to buy inventory through other ad networks when it makes sense for our clients.

Does this signal a change in the nature of the business or the model?

A: By canceling the publisher contracts and only picking up the clients, it supports our current business model and belief that the best solution for advertising agencies is an independent one-stop, software-backed solution that enables them to put together the most successful campaigns across all local publishers.

Real Cities has had mixed success in the past; how will you improve performance, participation?

A: Although more quiet in recent years than previously, Real Cities still serviced more than 250 clients in the past twelve months.

Will Centro now be competing with Yahoo’s consortium and quadrantOne for advertiser dollars and advertiser inventory?

A: Centro’s media software helps agencies quickly, easily and successfully place a media campaign across 100% of all local online websites across 100% of all their inventory including high impact placements, sponsorships and email based on advertisers’ needs. It’s a very different model than the remnant network model employed by Yahoo and quadrantOne that services only a portion of what we reach, both in terms of quantity and quality.

What’s RC’s current reach? Will Centro attempt to expand it further? How?

A: Centro will be integrating the Real Cities brand and client relationships into its organization. Centro has no intention of maintaining Real Cities’ network. We feel, and our publisher clients tell us emphatically, that a network model does not serve the industry as well as our model does. It is what has enabled us to grow as we have, and what has put us in the position we’re in today.

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In terms of reach, comScore treats Centro like an ad network and places it 23rd out of 50 in its “ad focus” ranking. RealCities was 41 by comparison. To further compare, MySpace is 27 on that list and YouTube is 30.

Blinkx Seeking to Acquire Miva

Miva is the story of a missed opportunity. The former FindWhat acquired early EU PPC ad network ESpotting several years ago and had a leading position in various EU markets, which it lost to Google and Yahoo. It was also the first company to bring PPCall to market (using Ingenio’s platform before Ingenio went out on its own).

At every turn there were problems and missteps.

Now video search engine and monetization platform Blinkx is seeking to buy the company for $1.20 per share vs. $.078 (at close). SearchEngineWatch has the company’s letter to the Miva board. There are few specifics regarding how the company might integrate Miva’s assets but it would be an accelaration of the ad network that Blinkx has been trying to build.

Many of the former Miva executives (including those from ESpotting) are now with SteakMedia.

Canadian YP Scores, US YP Struggles

YPG announced positive Q2 revenues and strong growth online:

Consolidated Adjusted Revenues increased 4.3% in the second quarter to reach $430.6 million. Revenues increased by $19.3 million to $430.4 million during the second quarter of 2008, compared with the same period last year. Consolidated Adjusted EBITDA1 grew by 7.3% to $235.4 million, while EBITDA (income from operations before depreciation and amortization) increased by $15.7 million or 7.1% to $236 million in the same period.

Online revenues from Directories and Vertical Media combined amounted to $61.4 million in the quarter. This represents organic growth of 44% over the second quarter of 2007. On an annualized basis, online revenues reached $245.6 million.

If I’m doing the calculation right online is now 14% of YPG overall revenues. That compares, generally, with <10% for US publishers.

How does one explain the Canadian success, while American publishers continue to struggle?

• Better management
• Monopoly status in directory industry
• More diversified online revenue sources
• Less online competition in Canada
• Pact with Satan
• Other?

Looking for LocalCandy

So Comcast has acquired the push email newsletter DailyCandy (which has local editions) for a reported $125 million. There are apparently about 2.5 million subscribers. That’s $50 per subscriber.

What the heck is Comcast going to do with it? — although the site makes money ($25 million in annual revenue).

ShopLocal does email promotions for retailers and there are other push vehicles that concern local events and shopping. Entertainment, events, shopping and travel deals are the sweet spot for something like this. DailyCandy has much of this content but there’s still room for others to put together content and offers in an interesting new way. Judy’s Book was looking at something like this when it ceased operations.

I think there’s an opportunity here.

PaidContent Bought by UK Publisher

By offering quality coverage with both breadth and consistency, PaidContent and its associated sites and conferences are now becoming part of the UK’s Guardian News & Media, a newspaper publisher that also runs a range of websites in the UK and US (now more extensive).

The estimated purchase price was in the $30 million range — a nice payday for founder Rafat Ali and his team.

Will we see more newspapers buying blogging sites? Probably not a ton but more newspaper publishers should probably consider it.

There may be a cultural bias against bloggers, even though many newspapers are embracing them. In some quarters — although this is ridiculous — there’s mutual disdain between bloggers and traditional journalists.

NBCU Buys No.1 Local Site

Some people could make a strong case that Craigslist is the number one local site online. However the top local site is probably Weather.com.

NBC Universal (and private equity) just bought that property and its cable channel parent from Landmark Communications for $3.5 billion. Landmark, which owns IP intelligence firm Digital Envoy, newspapers and classifieds properties, local TV affiliates and Q Interactive (formerly CoolSavings), had the makings of a great local ad network anchored by Weather.com. Alas . . . they’d probably rather have the cash. The Weather Channel had been for sale since January.

Weather.com has tons of geotargeted and contextual-local ad placements. It’s also got a mobile offering. All this is great news for NBC. Now what will the company do with it?

CNET Bought by CBS for $1.8 Billion

CBS is buying CNET for $1.8 billion. This vaguely makes sense for both sides (both are news and content “publishers”) and boosts CBS’s online presence and reach. For CNET it gets them out of the troubles of being a public company.

But what’s more interesting to me is this traditional media company buying a “new media” company — although CNET is old new media — as a quick way to boost its visibility and reach online. CNET is a top 15 Web property according to comScore. CBS also recently acquired LastFM. (RippleTV is also a potential CBS takeover target.)

The purchases are something of a “hedge” against the decline of traditional media businesses (TV, radio). Here’s the press release.

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Yesterday, Comcast acquired Plaxo. I’m not a fan of Plaxo, which remade itself from spam generator into social network. Comcast is one of the potential sleeping giants in local — with the capacity to make some interesting acquisitions — but it could well remain asleep.

MSFT-YHOO: The Fallout

Franky, I don’t have the energy this morning to do an elaborate analysis of all the potential scenarios. Here’s a list however:

• MSFT comes back at some future point and bids again
• MSFT goes after AOL now
• MSFT buys Facebook for $15 billion
• MSFT goes on a buying spree and picks up several, high-profile sites (e.g., Digg, LinkedIn, etc.)
• Yahoo!, needing to do a deal to placate shareholders and show momentum, still does a deal with AOL and/or Google
• In a “be careful what you wish for moment,” Y! now needs to really execute on AMP and YOS (open strategy)
• Yahoo! is off about $6.4 in pre-market trading. If it ends the day above $20 that will be a win for the company because of the “Black Monday” expectations.
• Here come the shareholder lawsuits re Yahoo!

Here’s a quick re-cap of the timeline of events and here’s more speculation about what will come over at Techmeme.

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From Yahoo! CEO Jerry Yang’s post:

So, what’s next? With Microsoft’s withdrawal, we’ll be better able to focus our energy on growing our industry leadership and maximizing value for stockholders. We’ll continue to execute on our plan — making your Internet experience as personal, relevant, open and social as possible, serving advertisers so well they insist on working with us, and opening up Yahoo! in a way that developers dream of. And, we’ll also continue to pursue strategic opportunities that position us for long-term success.

Has this experience changed us? Of course, it has. We’ve emerged a stronger, more focused company with an even greater sense of purpose. I’m so proud of how this company has come together, put the noise aside, and showed the world that we have the resolve and determination to thrive in challenging times.

We know the spotlight will probably stay on us for a while. That’s fine — we have a clear path ahead and momentum to build on. And thousands of dedicated Yahoos around the world who have held up well to scrutiny. It’s now up to us to show what we Yahoos can really do.

By the way, I’m sure you’ve all read or watched the news about this. Frankly, there’s a lot of nonsense and misinformation in what’s being reported. Just so we are all clear, here’s what happened. The board took its mission very seriously. We clearly indicated to Microsoft that we were open to a transaction but only if it were on terms that fully recognized the value of Yahoo! and was in the best interests of our stockholders.

No one is celebrating about the outcome of these past three months… and no one should. We live and work in a competitive world and the Web is only going to get more competitive. Executing on our strategic plan is what matters most.

Microsoft Withdraws Yahoo Bid

Amazing and true. Here’s the letter confirming this, just released:

Dear Jerry:

After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week’s conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

· First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.

· Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.

· In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.

· This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.

· It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,
/s/ Steven A. Ballmer

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

eBay-Craigslist Suit Details Out

The NY Times’ Brad Stone has a nice summary of the details of the lawsuit complaint (redacted version here), which is about dilution of eBay’s interest and board strength following Kijiji’s entry into the US:

In 2005, eBay went into the classified ad business overseas, launching Kijiji.com. In 2007, eBay launched the site in the United States.

In June 2007, Craigslist notified eBay that it was engaging in competitive activity and that both parties had ceased being subject to the right of first refusal.

In July, eBay notified Craigslist that it was withdrawing Josh Silverman, now Skype’s chief executive, from the Craigslist board since he had worked on Kijiji. EBay tried to appoint Thomas Jeon, an eBay lawyer, to the Craigslist board, but Craigslist did not respond to the requests, according to the complaint.

In late July 2007, in an e-mail message to Jim Buckmaster, Meg Whitman said eBay had taken steps to “completely firewall” off Kijiji from its interest in Craigslist. She also reaffirmed eBay’s interest in buying all of Craigslist. “We would welcome the opportunity to acquire the remainder of Craiglist we do not already own whenever you and Craig feel it would be appropriate,” she wrote.

That triggered what appears to have been fear at Craigslist that the non-profit-minded company could somehow be subjected to a hostile takeover.

Craigslist then took unilateral actions that effectively diluted eBay’s interest from the original 28% share to 25% and eBay also lost its ability to seat a director. I wrote at the time that Kijiji entered the US that eBay’s board position now had a fundamental conflict of interest since Kijiji was directly competitive with Craigslist.

Casual public pronouncements from Jim Buckmaster to the contrary, it seems the folks at Craigslist took all this very seriously and moved to diminish eBay’s influence and potential control, which they have now done.

I don’t have the corporate governance expertise to opine (as they say in the law) on the outcome of the action.

Were other entrepreneurs in control of Craigslist, they might be inclined at this moment to sell to eBay (potentially for billions) but it would seem that is not the inclination of messers Buckmaster and Newmark.

Here’s more opinion and discussion on Techmeme.

Now This Is Strange: ISP Buys FTD

United Online, which is an ISP (NetZero, Juno) and owns Classmates.com and which withdrew a planned IPO for Classmates.com earlier this year, has entered into an agreement to acquire FTD (the floral delivery company) for $800 million. Here’s the apparent rationale:

Diversification of Revenue Streams, resulting in United Online’s Communications segment revenues, which are principally driven by its NetZero and Juno Internet access services, representing less than 25% of total United Online revenues. The addition of FTD to the United Online family will provide additional revenue streams—e-Commerce and Retail—in addition to the existing Communications and Classmates Media businesses.

Still, it seems very strange. . . But it puts the company squarely in the local space. FTD has a marketing deal with ReachLocal to service the company’s 20K+ local florists.

Remember, Mother’s Day is Sunday May 11.

Cox Diversifies with $300M Adify Buy

Cox, which owns cable, newspaper, online and broadcast properties, has purchased ad network platform Adify for a reported $300 million. This is a really interesting buy for Cox.

Adify allows entrepreneurs, publishers and others to create “white label” ad networks using its platform. Adify refers to itself as a “vertical ad network.” Through its customers and their niche/vertical networks, Adify was itself building an interesting ad network. And Adify at one time was angling to become the backbone behind quadrantOne.

It’s certainly one of the most interesting ad platforms/networks out there. CEO Russ Fradin (formerly of comScore and Wine.com) will continue to run the company.

PaidContent reports (from sources) that 2007 revenues for Adify were roughy $7 million, so it’s a big multiple.

BuzzLogic Acquires BlogRovr

BuzzLogic is one of several companies that seeks to monitor “conversations” on blogs to determine their influence on particular topics. Nielsen’s BlogPulse, for example, offers a somewhat less precise version of this capability. The company however is also a burgeoning ad network and describes itself as follows: “an online influence-targeting company and growing social media ad network.”

The clever (and logical) thing that BuzzLogic did some time ago was to recognize that once marketers and brands discovered who was influencing “conversations” online they would then want to place ads on those very same properties. And BuzzLogic is currently doing that through AdSense (which most of these blogs use). (I had not remembered this but AdSense offers specific site targeting.) However the company is quickly expanding beyond the Google content network to include other networks and direct sales.

The thing that’s different about BuzzLogic is that it’s capable of identifying issues and topics with great precision. During a briefing they used “iPod battery life” as an example with me. In other words, the blog or blogs most influential (as determined by the company’s algorithm) on that precise subtopic can be identified. Apple can then target those blogs for advertising. BuzzLogic refers to this as “conversational targeting.”

In order to further improve the company’s algorithms it has recently acquired the assets of Activweave, which operates the “browser companion” BlogRovr. BlogRovr is a browser plug-in that enables people to monitor coverage of issues on blogs that they select. Once installed a “tray” appears from the side of the browser that shows coverage about content appearing on pages the user is visiting, whether other blogs or not. Data from both the blog selections that people make and their subsequent click-stream information will now factor into the BuzzLogic algorithm for greater accuracy.

Below are screenshots of its analytics display, showing influence and its ad-buying interface:

In contrast to a more conventional blog-ad network such as Federated Media or the new Six Apart ad network, BuzzLogic offers analysis of “influence,” which isn’t always synonymous with traffic.

Grayboxx Sells Assets, Shuts Down

I had heard this but didn’t want to report it until something was public. Andrew Shotland has now made the news public that Grayboxx is shutting down and has sold itself to Bay Advisor.

Grayboxx developed a unique method of determining “implicit” local recommendations and promoted that it would solve the problem of not enough reviews in enough categories in enough places. Its founders thought that the site’s content and breadth would naturally generate WOM and usage. But it didn’t have the runway (read: funding) to develop consumer trust, traffic and brand strength to generate revenue.

It’s also a cautionary tale about placing too much confidence in technology and about not having enough lead time to build awareness and usage.

Add Grayboxx to this list of those whose boards sold them or that were shut down because of a failure to get traction:

• InsiderPages
• JudysBook
• Edgeio
• Zync (acquired by uLocate before launch)
• Backfence
• Zipingo (shut down by Intuit)

Others?

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Here’s the release I just received:

BayAdvisor Acquires grayboxx Intellectual Property

Santa Clara, CA — April 9, 2007 — Grayboxx Inc., an online local
search firm, today announced that BayAdvisor has acquired its
intellectual property for an undisclosed sum.  The technology transfer
includes grayboxx’s patent rights to its unique PreferenceScoring™
technology, which algorithmically ranks local businesses in terms of
popularity.

“I think BayAdvisor may do some interesting things with the
PreferenceScoring technology and perhaps extend it to new fields,”
said Bob Chandra, founder of grayboxx.  ”There is still vast potential
within local search but also in related vertical search fields.”

About grayboxx
Grayboxx is a local online search Web site that provides the most
meaningful and extensive recommendations on local businesses and
professional services in thousands of categories for cities throughout
the United States. For more information, visit
http://www.grayboxx.com.

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Update: To correct myself, Grayboxx isn’t “shutting down” and will continue to operate under the new ownership. However the investor and entrepreneurs who started it have left the building . . .

Newspapers First to Get ‘AMP’d’ by Yahoo!

Yahoo!’s new ad integrated ad platform, previously called “APEX,” and now apparently being called “AMP,” is slated for debut  in Q3 with Yahoo!’s newspaper partners.

It will create the ability for the newspapers to sell not only their own sites but into Yahoo! and, eventually, other Yahoo! publisher partners as well. Equally, Yahoo! will sell its own advertisers distribution on the various newspaper partner sites. In other words it debuts as a kind of massive local ad network (there are more than 500 newspapers that belong to the consortium). In parallel newspaper-run quadrantOne is attempting something similar on a somewhat less ambitious scale.

AMP positions Yahoo! as a kind of central clearinghouse for ad inventory of all types: rich media and video, search and mobile. It’s extremely ambitious and technically challenging. If it works, it also makes newspapers stronger from an ad sales perspective, giving them much broader reach and access to a range of targeting capabilities they simply didn’t have in the past online.

If the Microsoft deal happens, however, the fate of the platform becomes uncertain given the stated objective to achieve economies of scale with a unified “back end” and ad platform. Microsoft has invested heavily in AdCenter and is unlikely to abandon it in favor of AMP unless the latter is clearly superior.

Here’s more coverage from Search Engine Land, the WSJ, NY Times and AdAge.

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Related: Yahoo! responds to Microsoft’s ultimatim.

Welovelocal Sells Majority Stake to Radio Firm

The UK’s welovelocal, part of a trio of similar, Yelp-like social directories — the others being TouchLocal and TrustedPlaces — has informed me that it just sold a majority stake to GCap Media plc, the UKs largest commercial radio producer.

From the release:

welovelocal.com is a social local search website that helps people find the best businesses in their area by reading reviews and recommendations from people they can trust. The site officially launched nationwide in December 2007.

GCap are the largest commercial radio network in the UK with over forty radio stations including Capital 95.8, XFM and Classic FM.

GCap will combine welovelocal.com’s highly engaged online audience with its own network of local radio brands to enhance the broadband strategy announced by Chief Executive Fru Hazlitt in February 2008.

Certainly welovelocal will benefit from the new parent’s promotional assets.

That brings me to Yell. I believe it’s inevitable that the UK yellow pages publisher will buy one of these sites. It’s a segmentation play to some degree to attract younger audiences, but it also prevents them from eating into Yell’s traffic and usage over time.

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Here’s an interview about the transaction with welovelocal’s co-founder Max Jennings.

YellowPages.com’s New Deal with Microsoft

YellowPages.com is replacing Superpages as the local listings provider to Microsoft’s local search and yellow pages sites according to Dow Jones newswires:

Yellowpages.com will begin providing ads in early April. No financial terms were given, and AT&T declined to provide any. Under the deal, ad listings will be served on local sites such as MSN Live Search and Live Search Maps, AT&T said.

The deal gives Yellowpages.com advertisers exposure to Microsoft’s search pages, AT&T said. The deal brings the total number of projected monthly searches on Yellowpages.com’s network to more than 160 million.

Previously Superpages displaced YellowPages.com on Switchboard, through an acquisition of the company.

There may be some money changing hands here; perhaps AT&T offered some incentive to Microsoft. It’s not clear, otherwise, why the latter would switch one listings provider for another with virtually the same content and capabilities.

But swapping in YellowPages.com doesn’t give Microsoft any strategic advantage or improvement in content depth or quality vs. its rivals. Acquisition of Yahoo! would give Microsoft access to a very rich product in Yahoo! Local by contrast.

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Update: Now that Ingenio is part of YellowPages.com, which I wasn’t thinking about in writing the above, there may be another angle here.

Update II: Here’s the Idearc statement (from an updated version of the Dow Jones piece):

“The traffic from MSN had not met our expectations and had not performed as we had hoped, so we would not have renewed that agreement without significant changes,” spokeswoman Mary De La Garza said in an emailed statement. “We are continuing to pursue other opportunities for our advertisers - given that we have a performance-based model and a different strategy than MSN.”

AOL Buys Bebo for $850 Million

From the release that went out this a.m.:

AOL announced today that it has entered into an agreement to acquire Bebo (http://www.bebo.com), a leading global social media network. Together with its AIM and ICQ personal communications network, the acquisition will give AOL a premier position in the fast growing world of social media with a network of approximately 80 million unique users.

With a total membership of more than 40 million worldwide, Bebo is a global social media network which combines community, self-expression and entertainment to enable its users to consume, create, discover and share content. Bebo is one of the leading social networks in the UK, and is ranked number one in Ireland and New Zealand, and number three in the U.S. Its users are heavily engaged and view an average of 78 pages per usage day. Bebo has approximately 100 employees operating in offices in the UK, San Francisco and Austin, TX.

The deal comes just one week after AOL’s launch of Open AIM 2.0, an initiative that allows the developer community greater freedom to access the AIM network and integrate AIM into its sites and applications, and the announcement by Apple of a downloadable AIM application for the iPhone.

Under the terms of the agreement, AOL will acquire Bebo for $850 million in cash.

Given all the discussion about AOL spinning off and being under such pressure this is somewhat unexpected. Yahoo! has a relationship with Bebo to provide ads and search and so it, in my view, was the more likely acquiror. However, this continues a string of big acquisitions by AOL and presumably provides a huge ad distribution opportunity for the company.

It will be very interesting to see whether anything happens now between AOL and Yahoo. More to come.

News Corp. Says ‘No’ to Deal with Yahoo!

Perhaps the most interesting of the potential alternative deals to Microsoft’s bid for Yahoo! just evaporated. Rupert Murdoch told a Bear Stearns investment conference that it wouldn’t be competing with Redmond:

“We’re not going to get into a fight with Microsoft, which has a lot more money than us,” Murdoch told investors…

This probably means that they couldn’t make the numbers work. And it also means AOL is really all that’s left for Yahoo! — and that’s doubtful for several reasons. A Microsoft acquisition now has the feeling of inevitability.

The Financial Times interviews Microsoft’s Ray Ozzie regarding the challenges of integrating the two companies. And Om Malik talks with Ozzie about a range of issues including how Microsoft is confronting “the cloud.”

Local and the Future of Digg

TechCrunch says that both Microsoft and Google (as well as others [perhaps News Corp.]) will be bidding in the $200 million range for social news site Digg. Neither MSFT nor Google has a really good social network — through both would disagree. But both have news, Microsoft with MSNBC and Google with Google News, which a journalist friend derisively referred to as the “random news generator.”

What’s more interesting is what Digg might become, a kind of all-purpose recommendations engine. From my previous post on the subject:

Read/WriteWeb does report that social-news site Digg is going to expand beyond news in the next 6-12 months:

They hope to provide a system whereby people can Digg just about anything, from restaurants, products, images and not just news and videos.

Unless there are some fundamental changes to the site it’s no threat to the major local players but it could be popular with selected user segments (young males primarily).

That last bit potentially changes in the hands of Microsoft or Google. Of course there are many “ifs” here, but it will be interesting to see how either company develops Digg further if it indeed bids and wins. A traditional media company like News Corp. might focus on news or news-like content and be less inclined to “build out” the site in other areas.