City Republic: Could an old-style ad man like Meyer help Yahoo!?

LONDON - As Microsoft and Yahoo! feel the fall-out from the deal that wasn't, Stephen Foster looks ahead to Yahoo!'s annual board meeting and an interesting suggestion for a new director.

Yahoo! and Microsoft shareholders revolt
It's not often that shareholders on both sides of an aborted deal are equally cross but that seems to be the case with Microsoft's failed bid for Yahoo!.

Yahoo!'s CEO and its new chairman Roy Bostock asked Microsoft for an extra $4 a share (way above what most shareholders would have settled for) while Microsoft CEO Steve Ballmer is under fire for his "take it or leave it" approach. The feeling is that, if Ballmer had been a bit more polite, Yang and Bostock would have settled for rather less. As it was, they had the opportunity to either roll over or roll over.

Yahoo! has now said it will call its annual board meeting by July 3, giving shareholders only 10 days to propose alternative directors from when the actual date is announced. But Microsoft has already proposed alternative directors, including veteran Grey Advertising boss Ed Meyer. The prospect of old-style adman Ed taking over Yahoo! is more than intriguing.

Grade's problems mount at ITV
As if ITV CEO Michael Grade didn't have enough problems on his hands, calls are mounting for GMTV (the breakfast show contractor 75% owned by ITV) to give away to charity the £63m it made from phone-ins in the four years to 2007. GMTV was fined a piffling £2m by Ofcom for this (ITV has just been fined £5.7m for the same crime) but reportedly held on to the revenue. ITV is to donate £7.8m to charity.

GMTV is now under pressure from all the political parties to give away the money (viewers who entered the quizzes in question have been invited to claim the money back but most haven't bothered). The last thing Grade needs, having just lost director of content Dawn Airey and with his share price languishing in the 60p range, is to have to bail out GMTV to the tune of £63m.

WPP-TNS fight gets personal
Sir Martin Sorrell's "surprise" bid for market research firm TNS looks like it wasn't such a surprise after all. TNS wants to effect an nil-premium £1.7bn merger with German rival GfK (ie, a share swap, with no benefit to shareholders other than participation in a bigger company).

Sorrell's WPP, which own the Kantar collection of research companies, promptly waded in with a £948m bid for TNS.

It transpires though that Sorrell had been talking to TNS CEO for some time and was not best pleased to discover that had a (preferred) plan B.

If WPP fails to win TNS, Kantar will lag behind the giants of the research world by quite some distance, so Sorrell probably will win.

But it'll take more than £948m to do so.

Oil boom or bust?
A year ago oil was trading at $50 a barrel, and everybody thought that was high. Now it's around $120 and Goldman Sachs, which called the first "spike" in oil prices, is saying it might go up to $200.

Er, why?

Well, developing economies in the BRIC zone (Brazil, Russia, India and China) are using more of the stuff; global oil prices are marked in dollars and the greenback has been falling like a stone against just about every other currency, and speculators, like hedge funds, have been driving up the price because there appears to be more money to be made on a one-way commodities bet than there is investing in companies or dodgy mortgage debt.

But it still doesn't really make sense. In theory, if the price rises because of surging demand, it therefore makes it more economical to extract oil from those fields that are so far unexploited because the cost of extraction is higher.

And surging demand, not least in the US, should encourage the oil majors to upgrade their refining capability (most US refineries are clapped-out old ruins that should have been upgraded years ago).

So it's a technical problem, or is it?

I don't think oil will settle at $200 a barrel, and I think lots of people who do will get their fingers burnt.

I also think it will spur the big car manufacturers to produce cars that run partly without, or even mainly without, petrol, which will absolutely hammer the oil producers.

Governments could help this process by introducing speed limits on traffic. 55mph, the norm in the US, on Britain's motorways is pretty likely in a few years' time.

All these things will take time to have an effect; cars last longer these days so new more fuel-efficient models will take a while to become the norm.

In the meantime, the economy, if not consumers, seems to cope remarkably well with high oil prices.

As David Smith in The Sunday Times pointed out at the weekend, oil use in the developed economies is actually down on four years ago, even in the US.

This is chiefly because industry needs much less oil to keep going than it did during the last big oil spike in the 1970s.

Consumers are the ones feeling the pain and they'll start voting for more fuel-efficient products of all descriptions with their wallets.

The speculators haven't got the message yet -- but they will.

Stephen Foster is a former news editor of Campaign, former editor of Marketing Week and Evening Standard ad columnist. He is a partner in Editorial Partnership and writes the blog www.editco.net and Politics of the Media for Brand Republic.

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