Yes, it's that time of the month again. You may remember us asking in October whether an AOL-Yahoo merger made sense, or in November explaining why talk of an AOL-Yahoo merger was overblown.


Well, yesterday, Reuters broke the news that AOL is exploring the possibility of splitting up its legacy dial-up Internet service (still its primary revenue stream) and its content and display advertising business, something it's been considering since before Time Warner spun it off. Reuters' unnamed sources suggest these actions could result in AOL selling off its dial-up business and merging its content business with Yahoo, though AOL has yet to formally approach the Internet portal and search provider. What are we supposed to make of these latest revelations?
  • Take This One With A Grain of Salt, cautions Matthew Lynley at VentureBeat: "The deal is reportedly maddeningly complicated and involves a number of potential suitors for the dial-up segment of AOL's business."
  • This Deal Makes No Sense and Won't Happen, argues Michael Arrington at TechCrunch, which is owned by AOL. AOL, he observes, is transitioning from a dial-up business to an advertising-supported original content destination. Yahoo, in contrast, is a portal and homepage. AOL is investing and experimenting; Yahoo is saving and cutting costs. "Everyone at Yahoo I've spoken with says they don't have any intention of entertaining buyout offers from AOL right now," Arrington explains. "And everyone at AOL that I've spoken with say that there's only mild interest at AOL of making it happen. It's the investment banks that are pushing hard for this, eager to make a commission on a huge public/public merger."
  • Actually, It Does Make Sense and Likely Will Happen, says Mashable's Ben Parr: AOL "has wanted Yahoo for years. AOL nearly put a bid in for Yahoo in 2008 after Microsoft tried to take over the company for its search business. There are a lot of potential content and advertising synergies between the two companies that could reduce a lot of redundancies." He says, though, that "it's more likely though that Yahoo will be the one doing the acquiring, and not the other way around. Now the question is whether Yahoo is or ever was interested in a merger in the first place."
  • There Are Arguments on Both Sides, contends Greg Sterling at Search Engine Land: "Both Yahoo and AOL are focused primarily on display advertising with content creation driving page views. There's a lot of similarity and a lot of overlap." On the other hand, "Yahoo's interest or capacity to buy AOL is still unclear. But it would take away a competitor and provide some additional reach and assets ... If Yahoo had Google's bank account buying AOL would probably be a no-brainer."