As Time Warner (NYSE: TWX ) and Google (Nasdaq: GOOG ) appeared to be heading toward a significant financial relationship yesterday, corporate raider and occasional party pooper Carl Icahn issued a stern warning about the proposed pairing.
"I am deeply concerned that the Time Warner board may be on the verge of making a disastrous decision," Icahn wrote in an open letter. The dissident investor isn't necessarily opposed to AOL expanding its interactive marketing relationship with Google. His fear is that the deal may get in the way of eventually selling off AOL in its entirety to a company like Microsoft (Nasdaq: MSFT ) , eBay (Nasdaq: EBAY ) , Yahoo! (Nasdaq: YHOO ) , or IAC/Interactive (Nasdaq: IACI ) .
Let's be realistic here. Both eBay and IAC/Interactive are coming off recent acquisition sprees, and they seem unlikely to jeopardize their already tenuous share prices by biting off more than they can chew. AOL.com's collection of online properties does fit well into IAC/Interactive's portfolio, but the company wasn't even a player in the search engine space until it gobbled up Ask Jeeves last year. There would be some tolerable overlap such as AOL Cityguides and IAC's Citysearch.com, but there would also be some conflicts of interest, particularly in the area of online travel.
Motley Fool Stock Advisor pick eBay is one that makes no sense to me. Yes, after going verb shopping for PayPal and Skype, eBay is no longer just an online marketplace. But beyond mashing Skype and AIM together, there just isn't much going on there.
This has always been about AOL.com's real estate, and that really means that Time Warner's online subsidiary is really the most valuable to the two companies with established paid search networks in place: Yahoo! and Google.
Microsoft is just starting to ramp up its online contextual advertising program, although Seth Jayson points out some technological advantages working in favor of a union with Microsoft in the long run.
Those are the three companies that would value AOL more than anyone else, and all three had Time Warner's Richard Parsons on speed dial over the past few months. Supposedly, Yahoo! even put in a stock swap offer to buy all of AOL but was shot down.
In the end, Time Warner would be making the right near-term decision to stick with Google. Even though Yahoo! has been selling contextual ads longer, Google simply does it better. Microsoft may have plenty to offer beyond paid search, but siding with Google can be many things, and none of them "disastrous" to AOL. And if Google is able to make AOL more valuable, Icahn will get his wish, too.
See? Everyone can win. Deep concerns, deep pockets, and deep drama are no match for the shallow simplicity of common sense.
There are a lot of players in this prolonged soap opera, and many of the stars have newsletter affiliations. Microsoft is a recentInside Valuepick. eBay and Time Warner were recommended inMotley Fool Stock Advisorback in 2002.
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Longtime Fool contributor Rick Munarriz is proud to be one of the remaining 20.8 million AOL subscribers. He does not own shares in any of the companies in this story. The Foolhas a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.