The Yahoo shareholder meeting is going on right now, but already not everything is going according to plan. Yahoo was able to avoid a showdown today with activist investor Carl Icahn by agreeing to open up three board seats. Icahn is taking one, and the board will vote for the other two members. Former AOL CEO Jonathan Miller was added to the list of candidates at the request of Yahoo, and was considered a shoo-in for one of the two other available seats. Not anymore.
At the 11th hour last night, Time Warner decided to object to Miller’s appointment to the board, according to three sources, including a former AOL executive close to Miller. Without Time Warner’s blessing, Miller cannot serve on Yahoo’s board since he is still under a non-compete agreement with AOL.
Why Time Warner would decide to do this is unclear. Before Yahoo and Carl Icahn publicly disclosed Miler’s name as an addition to the slate of people Yahoo’s board will choose from to fill the extra seats, Time Warner gave the green light to Miller’s inclusion. Now the strategy has changed, and last night Time Warner CEO Jeffrey Bewkes reneged on his earlier approval in a phone call to Miller. It gave no reason for the about-face. (Former Viacom CEO Frank Biondi is now a favorite to take one of the two available board seats).
When Jerry Yang found out about this he was “fucking livid,” says a source. Miller was someone Yang felt he could work with on the board and lean on for advice, given Miller’s past experience running AOL. Miller was someone Icahn was happy with as well.
So Time Warner just pissed off one of two possible buyers for AOL. Time Warner management has been obsessed with trying to sell off AOL, and the only two realistic buyers are Yahoo and Microsoft. “It is the entire AOL strategy,” says the former AOL executive. Now,Time Warner is angering a potential bidder for AOL, and effectively giving Microsoft more leverage to give a lowball offer. Institutional shareholders, many of whom own large chunks of both Yahoo and Time Warner, won’t be too happy about that.
“If you are the SS Titanic of AOL, you have to be friends with everybody,” says the befuddled former AOL exec. What is ironic is that if anyone could have made a Yahoo-AOL deal work it would have been Miller.
So does Time Warner think that it can make Yahoo less attractive to Microsoft, and AOL more attractive, by keeping Miller off the board? Or can Jeff Bewkes simply not stand the thought of Miller (whom he removed as CEO of AOL in favor of his own guy) becoming the CEO of a merged Yahoo-AOL down the road? That might make Bewkes’ earlier decision look stupid, especially given AOL’s poor performance since the switch. In business, it’s always personal.