Obama Must Get Internet and Media Oversight Right

07 Nov Obama Must Get Internet and Media Oversight Right

Google and Yahoo radically revised their proposed search advertising alliance on election eve in a bid for regulatory approval before deal-averse Democrats storm Washington D.C. As if the recession was not enough of a deterrent, more stringent regulatory reviews and restrictions expected with a Democratic administration will slow mergers, acquisitions and partnerships, which could be critical to some tech and media companies hoping to weather a prolonged recession. How draconian the regulations will become is anyone’s guess. President-elect Barack Obama has said he would pursue a vigorous antitrust policy, singling out the media as a consolidation-prone industry that would require close regulatory scrutiny. The compromise from Google and Yahoo came earlier this week as regulators prepared to block their originally proposed alliance. The modified pact for just two years caps Yahoo search revenues at 25% and does not oblige Google advertisers to participate. Some regulators and advertisers call the proposed arrangement anti-competitive. Yahoo needs the deal to boost its struggling search business, boost investor support and stay out of Microsoft’s (MSFT) clutches. The Department of Justice could still nix the deal. Many media and Internet companies will seek financial relief from the recessionary storm through asset sales and alliances. A Yahoo acquisition of AOL and partnership with Microsoft are among such rumored deals; a clearer picture could emerge today during Time Warner’s (TWX) earnings call with investors. Late Tuesday, some analysts were betting that a collapse of a Google alliance would most certainly make Yahoo the target of a $20-per-share takeover bid by Microsoft that could succeed this time. These are trying times for companies that are dependent on advertiser and consumer spending.

Seeking Alpha, NY, By Diane Mermigas, November 5, 2008