Microsoft's latest plan: acquire Yahoo's search business and convince either Time Warner or News Corp to snatch up the rest. Microsoft CEO Steve Ballmer and Yahoo board chairman Roy Bostock had a meeting scheduled Monday to discuss the plans, but Ballmer called it off at the last minute, reports the Wall Street Journal. Yahoo sources took the cancellation to mean Ballmer couldn't persuade News Corp's chairman Rupert Murdoch or Time Warner CEO Jeff Bewkes to do the deal. They're probably right about Bewkes. Word has it he's hoping Yahoo will buy Time Warner's AOL, not the other way around. As for Murdoch, he's been willing to hand over MySpace for Yahoo stock since at least last year, but perhaps like us, he's wondering why anyone would make a move for Yahoo shares right now, when they don't seem to be going anywhere but down. (Photo by xamad)

We've heard Google's Marissa Mayer is pushing hard for the company to acquire Digg. Without mentioning the social news site once, a Google News takedown in the New York Times neatly makes her case. Noting that it took Google News an hour longer than everyone else to report Tim Russert's death, the Times reports that Google News's traffic growth has been equally as sluggish:

Electronic Arts once again extended its $2 billion offer to buy Take-Two, the makers of Grand Theft Auto. Once again, Take-Two said no. "Their proposal still significantly undervalues Take-Two," said chairman Strauss Zelnick in a statement. [Reuters]

A source close to Glam Media — the ad network that rounds up websites for women and then resells their ad inventory at higher prices to advertisers targeting the demographic — told VentureBeat the company has turned down a $1.3 billion acquisition offer. Glam turned down the offer because it expects a "bigger opportunity" down the road — perhaps an IPO. One of Glam's own partners tells us it'd be "crazy of them if they did." And likewise, we've never taken much stock in Glam's business model. (Disclosure: Our parent company, Gawker Media, owns Jezebel, which competes with some sites in Glam's network.)

Yahoo CEO Jerry Yang and Microsoft CEO Steve Ballmer played golf over the weekend, but neither were able to put the ball in the cup, so to speak. The way Yang put it in his answers to Walt Mossberg's questions at the D6 conference yesterday, a merger between the companies now seems as unlikely as it did the day Ballmer first walked away from negotiating table. "Microsoft is no longer interested in buying the company," Yang said. This news will not please Yahoo shareholders Carl Icahn and his allies, who control at least 29 percent of the company, favor a merger, and have started a proxy fight for control of the company's board. In the above clip, watch how Yang intends to deliver the bad news and fight for his job.

BusinessWeek's Gene Marcial got his Microsoft and Yahoo sources to talk, but they didn't say very much. "Something will definitely happen soon," Marcial quotes "one of the people involved in solving Yahoo's conundrum." Marcial writes that sources say Microsoft still wants to buy Yahoo outright, although its also considering purchasing just Yahoo's search business. More sources say that if a Microsoft-Yahoo full buyout doesn't happen, Yahoo will outsource search to Google. That deal could be exclusive or it could be non-exclusive, sources tell him. In short, Marcial and BusinessWeek report nothing new. But don't let that stop BusinessWeek from featuring an air-brushed image of the silver fox in his pinstriped suit and silver tie on its home page. No, really. Don't let it. Rowr.

How'd the CBS-CNET merger go down? Without much involvement from CBS Interactive head Quincy Smith, it turns out. Most of the negotiations with CNET CEO Neil Ashe went through Fredric Reynolds, Executive Vice President and Chief Financial Officer of CBS. Occaisionally, CBS CEO Leslie Moonves stepped in to move things along. That and more surprises in our timeline of the deal, below.

Why didn't Microsoft CEO Steve Ballmer follow through on his threat to take his $33 per share offer for Yahoo to its shareholders? Because Microsoft chairman Bill Gates tapped the brakes, reports Kara Swisher. "Numerous sources" say Gates didn't want a Yahoo merger as a way to solve Microsoft's online problems, but figured as CEO of the company, Ballmer should have free rein.

Like the rest of us, Yahoo's negotiators don't understand what Microsoft CEO Steve Ballmer means when he says Microsoft wants to acquire just Yahoo's search business. Board members, fearing corporate raider Carl Icahn and his friends, would now prefer a full merger. Microsoft would be down with such a deal, except CEO Ballmer and company worry Yahoo cofounder Yang and Filo still won't accept a bid for less than $37 a share. We don't buy this excuse, if only because we've heard Yang and Filo don't have much say over negotiations anymore. Not after the high-fives.

Taking questions after a speech before the New America Foundation, Google cofounder Larry Page told the crowd the reason Microsoft and Yahoo shouldn't merge is that it would give Microsoft too much control over email and instant messaging. "90 percent of the communications all in one company, I think that's a really big risk." We totally agree! So when will Google open its search results pages to third-party advertisements?

Yahoo execs got a good look at Microsoft's latest plan — Microsoft has proposed acquiring Yahoo's search operations, buying a minority stake in the rest of the business, and selling off Yahoo's Asian assets — and these executives responded "lukewarmly," reports the Wall Street Journal. Need an aside to clarify the motives for each party in this drama? Here goes.

Corporate raider Carl Icahn, who has purchased 4.3 percent of Yahoo and proposed a new slate of directors for its board, hates Microsoft's latest plan to purchase Yahoo's search marketing business or otherwise partner with Yahoo to gain control of it. "Microsoft is trying to get the milk without buying the cow, and if you look at Icahn's history, he has never been used that way," one of Icahn's secret stooges told CNBC. "He does not want to see Yahoo pushed into some joint venture with Microsoft and is not going to be used to push Yahoo into it." Icahn and like-minded shareholders favoring a Microsoft-Yahoo merger control at least 29 percent of Yahoo. They do not, however, control Microsoft.

Over the weekend, Microsoft said it "raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." Sources told Kara Swisher that the alternative deal is an acquisition or partnership to give Microsoft control over Yahoo's search marketing business. Yahoo would keep everything else — notably its display advertising business — and Microsoft would control 30 percent of the search market. Perhaps more importantly to Microsoft, it would prevent Google from controlling more than 80 percent of the market with its own Yahoo deal. In its statement, copied below, Microsoft said it reserves the right to change its mind about the deal. We are utterly unsurprised.

Under the wing of CBS, CNET CEO Neil Ashe will continue to earn his $700,000 salary. He'll also get a 100 percent bonus and, in the next 10 days, a long-term stock award of "not less than $1,625,000 per year," according to a 8-K CNET filed with the SEC yesterday. CNET CFO Zander Lurie will get such a stock award worth "not less than $1,000,000 per year."

$30 billion hedge fund Paulson & Co. has released filings to show it owns 3.4 percent of Yahoo shares and intends to support Carl Icahn's bid to replace the company's board. Combined with Icahn's 4.3 percent share, Legg Mason fund manager Bill Miller's 5 percent share and Capital Research fund manager Gordon Crawford's 6 percent share, at least 18 percent of Yahoo's ownership now favors displacing the company's board with directors more amenable to a Microsoft merger. Capital Research funds beyond Crawford's control own another 11 percent of the company, raising that total to at least 29 percent. Shareholder activist Eric Jackson says investors owning another 3.2 million Yahoo shares favor a Microsoft merger as well. CEO Jerry Yang and chairman Roy Bostock can write all the letters they want. There's only one holdup: Getting Microsoft back to the table. (Photo by Simon Grossi)

Yahoo CEO Jerry Yang has written two letters in response to Carl Icahn's attempt to take over Yahoo's board. One addresses Yahoo employees and the other its senior management. Neither feature capitalization. Both suggest Carl Icahn's move to take over Yahoo's board "reflects a significant misunderstanding of the facts," which as Yang see's them are that he and Yahoo's board responded to Microsoft CEO Steve Ballmer's merger proposal with "diligence" as well as "knowledge, experience and commitment." Funny how Yahoo's largest shareholders seem to disagree. Both of Yang's letters are copied below.

After acquiring 3.5 percent of Yahoo in the week after merger negotiations fell through with Microsoft, corporate raider Carl Icahn will move forward with a plan to replace the company's board with directors expected to be friendly to resuming negotiations. Icahn could announce the alternative slate as early as tonight, Reuters reports, citing sources familiar with the matter. Which means the Wall Street Journal could run a widely expected hit piece on Yahoo CEO Jerry Yang as soon as tomorrow.

A still-independent Yahoo filed a 10-Q with the SEC last week, putting in writing some its current realities as well as its expectations for the coming quarter. Severance packages and other layoff expenses cost Yahoo $29 million in the first quarter. It plans to pay another $15 million in the second. Yahoo also now faces at least 10 shareholder lawsuits following the Microsoft merger negotiations.

The scene at Penn Station, where Radar sits alongside Mujer. Many Spanish-speakers are concerned about the heterosexuality of their babies, so this may be a savvy move.

Forget Sun + Apple. The next big deal will be eBay's inevitable merger with one of the two search giants. The net commerce company is already in bed with both Yahoo and Google.