It's as if he thought that playing a game of buzzword bingo would masquerade as strategic thought. A television salesman by trade, Falco was plucked by Time Warner CEO Jeff Bewkes from NBC Universal to replace Jon Miller, in a universally derided move. A commonly held belief among insiders: Falco and Bewkes thought AOL would be sold off by now, with Falco moving on to some role at Time Warner's film and television properties. AOL has continued to embarrass. And so has Falco. The only question is which exit will come first.

Some observers say Time Warner executives did a bait-and-switch, tacitly encouraging Yahoo and Miller to proceed with the appointment, and then publicly denying that they ever approved a deal. Backstabbing and double-dealing at the world's most famous agglomeration of corporate infighters? We are not shocked. But we don't think Miller, who saw their work firsthand at Time Warner, ought to be, either. (Photo by Lou Reed/Los Angeles Times)

Aside from keeping it out of Yahoo's hands, we remain confused as to why Microsoft would want AOL. Yes, Time Warner's online division has an impressive advertising reach across the Internet, thanks to its Advertising.com network. But it doesn't actually own most of the websites which carry the ads it sells. And of those it does own, how much of their traffic is from people who haven't figured out how to change their homepage? (Photo by AP/Paul Sakuma)

When Business 2.0, published by Time Inc., another arm of Time Warner, was on the rocks, its editor talked up a deal to save the magazine by merging it with TechCrunch. Those talks went nowhere. All of which makes us feel bad for TechCrunch coeditor Erick Schonfeld, who previously worked at Business 2.0; wasn't the whole idea of joining TechCrunch to escape Time Warner?

Yahoo employees don't relish a Yahoo-AOL merger, mostly because they and the rest of the Valley view AOL as a relic of the 1990s, still somewhat popular only because old people in flyover country aren't comfortable with change, even if it's just changing their homepages in Internet Explorer for the first time since 1997. We're skeptical Yahoo can close the deal. Cash-rich Microsoft is also said to be considering buying AOL in order to boost its brand-advertising inventory, and Time Warner CEO Jeff Bewkes just wants to offload the embarrassment. Don't expect CEO Steve Ballmer to let Yahoo embarrass him twice.

Vallewag: What would you think of Jon Miller going to Yahoo?

Calacanis:

Jon Miller would be amazing for Yahoo because he is extremely good at building display advertising businesses and buying young startups. Remember, when they let him go he was coming off back to back 40%+ gain quarters in advertising revenue—second only to Google (and well ahead of Yahoo). His biggest strength at AOL—in my mind—was buying promising startups and giving them tons of support, no red tape, and breathing room. Yahoo needs new blood and a focus on display advertising, with Ross [Levinsohn, former CEO of Fox Interactive and Miller's partner at VC firm Velocity Interactive] at his side you would have a very potent operator and M&A team.

Yahoo's best strategy right now is probably to build display advertising while buying and growing promising startups. Yahoo needs growth, Jon and Ross are growth guys (i.e. MySpace, Advertising.com, Weblogs, Inc, etc). As a bonus you have hundreds of VP/SVP/EVP level executives out there who are loyal to Jon and Ross, so you might see a talent influx with them at the helm, and talent wins.

Valleywag: You think he'd take the job?

Calacanis:

• Pro: It is the most challenging job in the space second to AOL
• Pro: Having reinvented AOL this would be cake walk/much more pleasant.
• Push: It would require a move from East to West coast—which is both a + and -
• Pro: It would be a great way to show the folks at [Time Warner] who's the man

I'd say if he gets the call he would most likely take it... big opps like this come along once every 5-10 years.

AOL has its challenges, but no other available Internet asset possess its breadth or scale. An acquisition of AOL would modestly increase MSFT’s search share, boost its page views and give it the dominant third-party ad network in Platform A.

Marangi recommends Microsoft pay $12 billion. We do not. BoomTown's Kara Swisher says if Microsoft is serious about search, it needs to buy more market share. But AOL's corner of the search market is not the corner Microsoft wants to own.

"Sometimes I tell my clients, if they're looking to target the over-65 crowd on the Web, not to worry about demographics — just go buy AOL," one agency exec tells us.

Microsoft's money would be much better put toward making an offer for a company that at least kind of, sort of owns a platform that maybe somebody could be as powerful as Google — Facebook. Microsoft should make Mark Zuckerberg a $12 billion-plus offer he can't refuse — even if his investors' lawyers have to prove it to him. (Photo by Michi W...)

If we're the shareholder, we're not calmed. MySpace is far more popular in the U.S. than Bebo. Despite that, ad partner Google still can't figure out how to make money off it. Why doesn't Bewkes just admit it? He had other things in mind when he bought Bebo. (Photo by AP/Peter Kramer)

Hot air balloon rides and circus performers. But then it would be difficult to fit either into 1015 Folsom, where the party is being held tomorrow night. As for the rest of Bebo's original employees? They've all left already.

AOL subscribers continue to visit its websites in droves; the placement of a link on its welcome page drives highly profitable traffic. Why shouldn't the Internet-access business get a cut?

There's a simple answer: AOL should put its traffic up for bid. If online ads can be sold at auction, why not pageviews, too? AOL's infrastructure, too, can charge a market rate; Amazon.com's storage and computing rental operations offer an easy proxy for these costs.

One suspects the reason why there's a holdup in splitting up costs and revenues between the businesses is not that AOL's number-crunchers haven't come up with figures similar to what market mechanisms would dictate. Rather, it's that the numbers aren't to Time Warner management's liking. Dial-up is still quite profitable; Web publishing, not to the same degree. For Time Warner, which wants to shed the former and keep the latter, that result is quite awkward.

(Screenshot by Dave Taylor)

As with TWA, Icahn is making a fundamental mistake. He thought that an airline was about airplanes, and he likewise must imagine Yahoo is about websites, or banner ads, or searches. Wrong in both cases. Those businesses aree about people. At TWA, his actions precipitated crippling labor unrest. At Yahoo, the talent won't strike, but it will leave — those who haven't already walked out the door, that is. At Microsoft, too, the thought of taking on all of Yahoo's problems is sparking unease among the executives who would be charged with making a deal work.

Besides Microsoft, it's unclear what Icahn can do for Yahoo, or to Yahoo. Certainly, its board and management need wholesale replacement. Yahoo requires a "product Nazi," one Silicon Valley executive told me, to bust through the company's broken culture of consensus and impose a singular vision on all its efforts. But Icahn is exactly the wrong person to attract that kind of talent. He freely admits he knows nothing about technology; he's just good at opportunism.

As Dan Lyons, writing as Fake Steve Jobs, points out, Icahn's assault will likely start with a character assassination on Jerry Yang, as Icahn did with Motorola CEO Ed Zander, who soon resigned. With Yang's poor performance handling the Microsoft bid, he has sharpened Icahn's knives for him.

Yahoo president Sue Decker should start earning her outsized pay and head this off by taking the lead on handling Icahn. (Yang, the prickly cofounder) is far too tone-deaf to handle such a negotiation.) She should take her cues from former Time Warner CEO Richard Parsons, who played Icahn like a fiddle during his attempted raid on that company; instead of breaking the company up, as Icahn suggested, Parsons arranged for a slightly larger buyback of shares than previously planned.

The lesson from Parsons: The way to handle Icahn is to spend lots of time letting him talk, and then figure out how to pitch something the company was planning to do anyway as his brilliant idea. For Decker, who is widely thought unqualified to be CEO at Yahoo or anywhere else, it will be excellent practice for her future as a perpetual No. 2.

(Photoillustration by Jackson West; photo of Icahn by AP/Mark Lennihan)

Big mergers and acquisitions, particularly among public companies, particularly among public companies that have large shares of their respective markets, can take a year or more between the day the deal is signed and announced, to the day the deal is actually executed and closed. During that year plus, all kinds of things can happen that could cause the deal to fall apart.

Isn't Andreessen obviously thinking of AOL-Time Warner, a deal which faced intense opposition from competitors and regulatory scrutiny, and which Andreessen has called a "rolling catastrophe"? Come on, Marc, look on your keyboard. There's an "a" key on the left. An "o" on the right. And just below it, an "l." It can't be that hard to type.

As Defamer points out:

Time Warner CEO Jeff Bewkes cited a 60%-70% profit margin during a VOD trial for Warner Bros. films on cable — more than twice the return on Time Warner DVD rentals.

Seriously, Beboers, If you're going to start sucking up to your new overseers, you should brush up on your corporate culture clashes. The "overlords" line had its start on a Simpsons episode. The Simpsons is produced by an arm of News Corp. AOL is a unit of Time Warner, whose top executives despise News Corp. For maximum obsequiousness, try picking up lines from Friends instead. That TV series was produced by Warner Bros.

Depressing, because Yahoo was supposed to be a bridge between the Valley, Hollywood, and Madison Avenue — not a battlefield. And once Yahoo is swallowed up, as it surely will be, those power centers will resume warring, to the benefit of their egos but at the expense of their customers.

Each suitor views Yahoo as something different. Microsoft wants to gain relevance in advertising and search. News Corp. wants to flip MySpace for a profit before its star fades further. Time Warner simply wants to rid itself of AOL, and all the bad memories of a failed merger. Google simply wants more pages to feed into its monetization machine.

No one wants Yahoo for Yahoo, save for embattled founder Jerry Yang. And he has not so much a vote in the matter as the threat that he'll have a nervous breakdown if the board sells his baby out from under him.

It is likely too late to save Yahoo. Indeed, it's not even clear if its suitors understand why they're pursuing it. News Corp. and Time Warner see it as a dumping ground for their online properties — but both would be shackled by a large stake in the enlarged business. Microsoft wants to apply its technology expertise to Yahoo's websites, but it surely underestimates the ruinous culture clash that would entail. Google doesn't really want to help Yahoo; it just doesn't want anyone else to run off with it. The result of any deal would be the status quo.

It's hard to see how Yahoo can escape the snare, and if it did, how it might once again pursue its ambitions of bridging the old world of media and the new. Cozying up to Madison Avenue's agencies meant that Yahoo missed the power of Google's automated ad-selling machine. Playing at being Hollywood studio made Yahoo's embrace of user-generated content too slow and to tentative. Someone will have to step into Yahoo's role. But its cautionary experience will scare away peacemakers. What once was middle ground is now scorched earth.

The deal isn't likely to happen. Desperate for an alternative to Microsoft, Yang is said to be still hoping for an offer from News Corp. as well. Meanwhile, Microsoft execs told the Wall Street Journal they expect merger talks to turn "friendly" any day now. Or the could just propose a new slate of directors when the current board comes up for reelection on March 14. At this rate, that's seeming easier.