Last year I speculated whether AOL and Yahoo might fit together after they had morphed into low-rent content shops. Seems I'm not the only one thinking that way, as AOL and a couple of private equity firms are reported to be bidding for Yahoo, after which they would strip some of its assets to help pay for the deal.
If it comes off, this deal is going to be a tightrope walk. Private equity has not had a lot of luck with legacy media - witness Sam Zell's disastrous acquisition of the Tribune. AOL and Yahoo haven't quite drifted into the legacy category yet, but they are both fallen stars trying to retrench from broken business models. There will be some ruthless slashing to get down to a coherent and possibly profitable core, and those doing the cutting won't have home addresses in Silicon Valley. Look for more pain at the offices out by the Baylands.