Jerry Yang may have just figured out a way to not hose Yahoo! (NASDAQ: YHOO) shareholders. The Wall Street Journal is reporting that Yahoo! and Time Warner Inc.'s (NYSE: TWX) AOL may be close to a tie-up to combine their Internet operations. According to the report, Time Warner would make a large cash investment into Yahoo! and then Yahoo! would repurchase billions of dollars worth of shares in the mid-$30's. Just keep in mind that as of now, this all only an unverified WSJ story; nothing has been released by the companies.

This would thwart Microsoft Corp. (NASDAQ: MSFT) in a deal valuation, or at least that would be the intent. Interestingly enough, there were headlines today tying Yahoo! into running some test search-ads via Google (NASDAQ: GOOG). As long as we're talking about your cousin's sister's brother, Google also owns a 5% chuck of AOL via a prior $1 billion investment. In order to monetize the deal, AOL would have to have a liquidity event of some sort, although by now the time may have passed.

There are no assurances that shareholders would go along with an AOL/Yahoo! combination, nor are there assurances that this would net more money to Yahoo! shareholders in the end. Time Warner shareholders might even potentially be an issue. Until there are more facts out other than the Journal's un-named sources, it's just all hearsay anyway.

Frankly, it's a wonder that Bill Gates hasn't tried to get involved in this deal with his own money. He could always say he's too young to go do charity.

If you are a longtime shareholder of Time Warner Inc. (NYSE: TWX), you are very patient indeed. You can count me among you, and you can count a thousand times we've had carrots dangled in front of us that gave us hope we would see some nice gains in our shares.

I am pondering why I am still hanging on. My cost basis was $12.10 and we sold half our shares in the low $20's amid the flurry of news about Carl Icahn, share buy backs and breaking up the company. I sold some stock and he sold some stock, I kept some shares and he kept some shares. Mine are of little consequence except to me. His are of the utmost importance to everyone.

As long as Carl still has some hope, should we? TWX is trading around $14 these days. This is a story of a company going nowhere fast. It has been improving AOL over the past few years and the site is very good in my estimation. But that does not seem to be producing much growth.

As AOL improves, so do the competitors and to a large part the status quo continues. From my perspective, the Web business is just a spending game where the stakes keep increasing but the rewards are not always tangible. (Disclosure: AOL is the mothership for BloggingStocks.com which by many metrics has been very successful, but our success has limited impact on AOL's overall revenue).

A recent SEC filing laid out the "upside" part of executive compensation for Jeff Bewkes, president and CEO of Time Warner Inc. (NYSE: TWX). He has received options that gives him the right to acquire 1.5 million shares of common stock. Bewkes' new options have a $14.92 exercise price and will vest over the next four years.

Bewkes already received options to purchase 950,000 shares in December in connection with his new employment agreement. Former CEO Richard Parsons still remains chairman and he has received 106,500 restricted stock shares and an option to acquire 319,400 shares.

If Bewkes and the team perform and this stock goes back up to $20, Bewkes would net an extra $7.62 million in gains before taxes.

This does not look egregious at all when you consider the situation. Bewkes stepped in right when the economy started a serious slump and negative stock performance had already started well before that. It may take some time for Time Warner's stock to get back up to $20 because of the economy and the bite of the bear market. Shareholders should be glad to see that he has some serious incentive to perform.

Time Warner shares gained 37 cents, or about 3%, today to close at $14.84. The 52-week trading range before this was $14.64 to $21.97. This stock ended 2007 at $16.45 and shares were above $18 last November.

After Time Warner Inc. (NYSE: TWX) posted earnings today, shares are up more than 4% in late morning trading. Jeff Bewkes conducted his first earnings conference call today, and he revealed the company's key business initiatives. (You can do a quick jump to the AOL story on this or you can head straight over to review the full conference call.)

Bewkes is known for being decisive and making changes based on the numbers, so don't be surprised if there are more changes than these down the road.

In fact, Bewkes noted that Time Warner will be cutting $50 million in corporate spending, with a target of 15% cost reductions on the corporate side of the business.

With investors everywhere trying to read the tea leaves and see what the future holds for Time Warner (NYSE: TWX), the seemingly innocuous comments made by Jeffrey Bewkes and Richard Parsons may provide the best clue as to how things will change when Bewkes takes over:

Parsons, who will stay as board chairman, said in a statement that Bewkes "will have my full support, and I am confident that Jeff will deliver a new era of growth for all of our company's important stakeholders."

Bewkes added: "We have a lot to do, and I'm intensely focused on building shareholder value."

(emphasis added)

John K. Martin, Jr., who has served as Time Warner Cable's CFO since August 2005, will leave Time Warner Cable Inc. (NYSE:TWC) to become the CFO of Time Warner Inc. at the beginning of the new year.

Robert D. Marcus will become TWC's new Chief Financial Officer effective January 1, 2008. Marcus will retain the title of Senior Executive Vice President and continue to direct Time Warner Cable's mergers and acquisitions, programming, human resources and business affairs departments and will add responsibility for all of the Company's financial functions, including accounting, financial planning and analysis, tax, treasury and investor relations.

Marcus joined Time Warner Cable as Senior Executive Vice President in August 2005. Prior to this he served as Senior Vice President, Mergers and Acquisitions for Time Warner Inc., (NYSE:TWX) and he served in various executive capacities with the parent company since 1998. Marcus was dubbed by the company as the architect and lead negotiator of numerous transactions for Time Warner Inc. and its subsidiaries, including Time Warner Cable's acquisition of Adelphia Communications Corp. and related transactions with Comcast Corporation (NASDAQ: CMCSA), which took place last year.

It sounds like Jeff Bewkes has already been lining up his key personnel to lead the transition period ahead. As a reminder, both companies report earnings Wednesday morning before the market opens.

Shares of Time Warner Inc. (NYSE: TWX), News Corp. (NYSE: NWS) and Walt Disney Co. (NYSE: DIS) haven't done well this year. Have they been in Wall Street's dog house long enough?

Time Warner, down 18% this year, trades, at a multiple of 18. Disney, whose shares are little changed, is trading a forward price-to-earnings ratio of 17. News Corp., also little changed, is the most richly valued of the bunch with a forward p/e of 20. All three of them report earnings this week. To put it diplomatically, expectations are low. Disney is probably the most compelling value there because of strong brands and top-flight management.

Revenue at Time Warner is expected to be $1.41 billion, up 14.8% according to analysts surveyed by Thomson Financial. Earnings are expected to be 11 cents compared with 19 cents a year earlier. The stock rose today after the company announced that Jeff Bewkes would replace Richard Parsons as CEO starting next year. Don't expect any big changes at AOL, though. The strategy to turn around the Internet unit was developed by Bewkes. The company will come under pressure to divest AOL and other businesses including publishing. Earnings are due Wednesday.

Disney reports Thursday. Analysts aren't expecting much out of the Mouse House. Revenue is expected to inch up 2.2% to $8.98 billion. Earnings are expected at 41 cents versus 36 cents a year earlier. With the record-low dollar, the company's Theme Parks are dirt-cheap for foreign tourists. Earnings also should be helped by the "High School Musical" franchise and a solid performance by the ABC Television network.

There will be plenty of talk about the acquisition of Dow Jones & Co. (NYSE: DJ) on Thursday's News Corp. earnings conference call. There will also be discussion about the surging popularity of Facebook. Though so far the Fox Business Network has underwhelmed critics, Murdoch will no doubt put a positive spin on the channel's debut. Revenue for the quarter is expected to increase 9.6% to $6.48 billion. Earnings are pegged at 23 cents versus 19 cents a year earlier.

Richard Parsons is giving up his position as chief executive officer at Time Warner (NYSE: TWX) to be replaced on Jan. 1 by Jeff Bewkes, the current president. Parsons is stepping down, not because the job is done but because his job is done. He is no longer the person for the job and that has become apparent to everyone, including him. There is no angst, there is no acrimony -- he has done some things very well during difficult times, but it's time to move on.

There are those who would have you believe that this move should have come earlier, myself included. But Parsons and the board were not working on my timetable. Parsons will retain his position as chairman of the company. Depending on how quickly his replacement, TWX president Jeff Bewkes implements his ideas for change, Parsons may be leaving a company that does not much resemble the one he has been leading the last few years.

AOL has already changed a lot. We have witnessed AOL being removed from the company name after billions of dollars of write-downs. AOL was converted to an advertising model instead of being subscription-based. It established partnerships with many other companies including Google Inc. (NASDAQ: GOOG), which acquired a 5% stake for $1 billion and is now the primary search engine.

Time Warner Cable concluded its acquisition of Adelphia Cable and reorganized to form the independent Time Warner Cable (NYSE: TWC) and is struggling somewhat as the cable market changes with the telcos and satellite media providers joining in the competition for home users by bundling services.

Time Inc. has sold off some magazine titles, closed down others and is still trying to define where its future fortunes will be found.

At a talk on September 20th at New York's 92nd Street Y, Lazard Ltd. (NYSE: LAZ) CEO Bruce Wasserstein took a swipe at Time Warner Inc. (NYSE: TWX), BloggingStocks' parent, for its moribund stock price. At the same time, Wasserstein patted himself on the back for taking all his chips off the table when the stock levitated above $18 following the publication of a Lazard report on Time Warner.

Lazard, which was hired by corporate raider Carl Icahn in February 2006, authored a 343 page report that argued for a breakup of Time Warner and a big stock buyback. Beyond its $5 million fee, Lazard's reward from Icahn was a bonus based on how far above $18 Time Warner stock went. Lazard's report estimated that Time Warner's breakup value ranged between $23.30 and $26.57. Following the report, Time Warner stock rose -- peaking at $22.73 on January 12, 2007 -- before declining to its current $18.99 -- about 50 cents a share above its price in February 2006.

While he claimed to like Time Warner management -- he called CEO Dick Parsons "a lovely, well-liked guy" and president Jeff Bewkes, "a highly regarded management kind of guy" -- Wasserstein blamed Time Warner's moribund stock price on their decision not to follow the recommendations in his report. Wasserstein thought Time Warner took one of his ideas -- a $20 billion stock buyback (Time Warner bought back $12 billion) -- but ignored his other suggestions -- to do more spin-offs and to run AOL more effectively.

The New York Post reports that plans to make AOL email addresses free for high-speed customers are only the tip of the iceberg; in fact, they say, the Time Warner board is considering much more radical moves. Carl Icahn wanted to spin off underperforming units? Well, then, why not give shareholders what they want?!?

The plan the Post discusses seems much less radical than any Icahn could truly get excited about: they say Time Warner has been talking to the biggie media and internet companies about partnerships, and if that doesn't work out, the board might consider spinning off 20% of AOL to shareholders.

What is 20% of AOL worth? And which 20% might be released into the wilds? This seems an odd proposal, I'd be interested to hear any scuttlebutt you Time Warner watchers have heard on this rumored deal. But even more interesting is the balance of power between Time Warner president Jeffrey Bewkes -- perhaps heir to the Time Warner throne -- and AOL CEO Jon Miller, who the Post says is "playing second fiddle" to Bewkes in the upcoming board meeting discussions about AOL. Will Miller be given the axe, the Post intimates slyly? I hardly even dare ask the question.

Jeffrey Bewkes, president of Time Warner, told his Sports Illustrated magazine division to go take a flying leap when they wanted to partner with AOL's sports channel to build a giant sports web site. Synergies, he told the Wall Street Journal, are bullshit.

As someone who made part of her career not just believing in synergies but putting solid numerical values to them and offering them up, like holy sacraments of PowerPoint, to the strategists at gigantic corporations: this is a hard pill to swallow. And though I see it not working more often than not, I also see so many areas -- yes, within Time Warner, where I work today -- where it does work. Heck, everyday I make my bucks on the back of the synergy.

But instead of calling them "synergies," now, Time Warner is calling them "adjacencies." Sumner Redstone split up Viacom and CBS because the "clout" he was supposed to get from his company's huge size "got us nowhere." Is the day of the synergy over and done with?