One of Yahoo!'s (NASDAQ: YHOO) plays for showing that it does not need a deal with Microsoft (NASDAQ: MSFT) is to find another large partner for a merger or joint venture. It is becoming more likely that the partner may be either Time Warner's (NYSE: TWX) AOL or News Corp (NYSE: NWS), which owns MySpace.

The structure of a deal with AOL might look very much like the one the firms discussed earlier in the year. According to The Wall Street Journal, "The two companies are talking about a structure they began discussing several months ago -- an arrangement whereby Time Warner would fold AOL into Yahoo and take a minority stake in the combined venture."

A transaction with AOL would give Yahoo! three important advantages. First, it would nearly double the size of its user base, giving it by far the largest audience of any company in the US. Yahoo! would also get AOL's Advertising.com network, the biggest display ad network in the nation. Finally, Yahoo! would get a substantial set of new customers for its search and search advertising businesses.

Wall Street wants to see Yahoo! sold. Any other alternative, including a deal with AOL, is likely to drive its shares down. But, if it wants any chance of staying independent, a transaction with Time Warner may be its only viable alternative.

Douglas A. McIntyre is an editor at 247wallst.com.

Shares sold short in Microsoft (NASDAQ: MSFT) fell 14.1 million shares in September to 83 million. It seems that the shorts knew enough to get out ahead of good news.

So far this year, Microsoft's stock has been flat, but over the last three days it has moved up more than 3% on news that it had released its Halo 3 video game and that it is in talks to buy part of social network Facebook.

The enthusiasm about Halo may be well-placed. In the company's last fiscal year, its devices business lost $1.9 billion on $6.1 billion in revenue. The previous year was not any better. The world's largest software company needs a catalyst to drive sales of its Xbox 360, and Halo 3 may well do that.

The Facebook deal has also drawn a great deal of attention. Rival Google (NASDAQ: GOOG) is building a large advertising platform using its own search inventory combined with impressions that it gets from its AdSense network. To expand that business, it is buying DoubleClick and has a deal to sell ads on social network leader MySpace. AOL is making moves in the same business. It owns Advertising.com, the largest ad network, and has just bought behavior targeting company Tacoda.

That leaves Microsoft sitting well behind its rivals. A deal with Facebook could help expand a network around its portal, MSN. Online services lost $732 million last year.

It may be that the company is facing up to its online and devices problems. That could be good news.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Time Warner Inc. (NYSE: TWX) has some good news still cranking out of its AOL unit. comScore has just released its new Internet "Top 50" lists today, and in August, Advertising.com remained atop the Ad Focus Ranking. comScore said that Advertising.com is reaching 89% of the more than 181 million Americans online.

If you just run some simple math, this would generate a total audience reach of roughly 161 million Americans. Obviously an audience reach is not the same ranking for search or time spent per visit on a website, but the number is more than substantial.

If AOL is or is not going to end up being its own unit or a tracking stock, this advertising.com is a major help. If you will recall, the parent just rolled out the Platform A that integrates all the online ad properties and builds upon the Advertising.com business. That should help extend the reach even more, although you have to wonder if any changes may cause a skipped beat here and there. Obviously AOL wants to increase the depth of this reach now. Even a slight incremental increase in "per user" metrics can have a major impact with numbers this large.

Jon C. Ogg is a partner in 24/7 Wall St.; he does not own securities in the companies he covers.

Google Inc. (NASDAQ: GOOG) has signed an exclusive pact with Time Warner Inc.'s (NYSE: TWX) CNN unit to use Google's AdSense advertising program for text-based ads.

The AdSense service will place contextually relevant ads alongside CNN.com content, allowing both small and large advertisers to target CNN.com specifically. Google will serve as the exclusive provider of auction-based text advertisements throughout CNN.com.

Without seeing the contracts it is impossible to know how this ad money will be divided, and it isn't known if Google had to pony up cash or any guarantees to get this on an exclusive basis. The Google pact isn't exactly a huge surprise either because if you look at the CNN.com site, its search function already has the "POWERED BY GOOGLE" feature.

It may be a surprise that CNN isn't using the Advertising.com platform, although it would seem a safe bet that this could fuel all sorts of speculation between the two platforms. After the strong advertising reach the company showed in the most recent comScore data it would seem quite a strong platform. This also brings more 'outside revenues' rather than one Time Warner unit generating revenue for another unit. CNN is not part of AOL so this would 'likely' be independent of any future arrangements between the two companies.

Update (Aug 29): An email sent to me from a CNN employee states that the relationship is still there and this will not affect the Advertising.com pact with CNN.

Jon Ogg is a partner in 24/7 Wall St., LLC; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.

Google's (NASDAQ: GOOG) deal to buy DoubleClick seemed certain to get a government review. Google is too dominant in text advertising and DoubeClick too big in display ad serving and targeting. Of course, competitors like Microsoft (NASDAQ: MSFT) said it would put too much online advertising power in one set of hands.

Now the eyes of the Federal Trade Commission have turned on Microsoft and Yahoo! (NASDAQ: YHOO). Their respective deals to buy aQuantive (NASDAQ: AQNT) and Right Media are going to get the antitrust once over, at the very least.

Right now, the FTC's review of the Google deal is more formal [subscription required] than the other two, but that could change. More than one industry association has asked that the government to take a close look at all three transactions.

Although the odds are that none of the M&A activity that is designed to bring advertising targeting under the umbrellas of big web portals will be stopped, perhaps the FTC work will be more than a formality. When these three transactions are added to AOL's ownership of Advertising.com, the concentration of private data about individual's web habits will be in very few corporate hands.

Perhaps there should be a divide between those that have the information and those who have the advertising inventory. But, that would be in a too perfect world.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Advertising.com, a unit of Time Warner Inc. (NYSE: TWX), looks like it has scored in the online video content deal with General Electric's (NYSE: GE) NBC Universal and News Corp.'s (NYSE: NWS) video venture launching this summer. Its Advertising.com unit will be the ad competitor to Google Inc.'s (NASDAQ: GOOG) YouTube.

It is almost ironic since AOL search is powered by Google and since Google took a 5% stake in AOL for $1billion in late 2005. Advertising.com will manage display and video advertising for the new site and will manage ads inserted into an embedded media player to be used by distribution partners. The venture is sill quietly dubbed "NewCo2.0" as there is not an official name.

You have to wonder just how much TradeDoubler is missing out on now after a few influential shareholders quashed the Time Warner bid.

Time Warner Inc.'s (NYSE:TWX) AOL announced a cash offer for TradeDoubler, a Swedish online ad marketing and placement firm. But while the board had negotiated and approved a deal, it was forcefully rejected by TradeDoubler's larger shareholders.

The formal offer was for SEK 215 per share in Stockholm. The total value of the proposed transaction was about $900 million if you fully dilute the value with warrants outstanding. Nordea Funds, AMF Pension, and Alecta, which are larger shareholders in TradeDoubler, believe the bid is too low.

What is a bit odd is that the deal was negotiated and was recommended by the TradeDoubler board and got the backing of shareholders with around 20% of the stock. But the bid needs 90% approval. Even if every other holder approves the deal, this won't occur at current prices. AMF (with a 5.1% stake) and Alecta (with a more than 10% stake) can block it.

This acquisition would have added in a solid marketing and ad niche to the portal and content businesses that AOL retained as part of the AOL Europe unit sales in Germany, France, and the United Kingdom.

TradeDoubler trades in Stockholm, Sweden under the local ticker of "TRAD" and shares are up 15% from the pre-offer levels and are higher than the implied offer price. So now you know the stock is in play and a perceived floor is apparent.

What is hard to know now is if AOL will go back to negotiate with the larger holders or if it will walk away. A deal would add value to AOL's Advertising.com. Now the question will be if it adds value at $1 billion or more instead of the $900 million. In its piece this morning, the Wall Street Journal (subscription required) said that Time Warner isn't planning any hikes to its offer.