DMW’s CEO & Publisher provides a wrap-up of the top stories of the week. Who’s hot, who’s not and what’s the industry buzz?

In my column last week, I predicted that there may be a silver lining in Yahoo’s recent troubles and low share price in the form of a possible takeover bid from rival Microsoft. Voilà! In a bold move that sent ripples through Silicon Valley before sunrise on Friday, Microsoft (NASD: MSFT) announced that it has made an unsolicited $44.6 billion takeover bid for Yahoo (NASD: YHOO). The announcement of the potential deal, which would give Yahoo's shareholders the option of taking $31 a share in cash (a 54% premium on YHOO's closing price) or an equal amount of Microsoft stock, sent Yahoo’s stock, which had dropped below $20 a share earlier in the week on news of more layoffs, sharply up with a single day gain of $9.20 and ending the week at $28.38.

Analysis: The move by Microsoft represents its stiffest challenge to Google (NASD: GOOG) in the online advertising market and may single more troubles ahead for Google. On Thursday, Google reported another quarter of solid earnings, but the stock didn't take the usual 4-5% jump on the news. Instead, Google shares continued to fall ending the week at $515.90. Google shares have fallen more than $200 a share since November. Why the fall? Last March, Microsoft CEO Steve Ballmer publicly accused Google of being a "one-trick pony" that has not had much success in business areas outside search engine advertising. With concerns that ad spending on things like travel, retail, etc. will suffer in a recession, it appears that investors are starting to act on the fear that a recession will have a negative impact on Google’s ad model. This is likely one of the more important stories to watch in 2008. Also on the watch list are the implications that a Microsoft/Yahoo deal would have for Time Warner's AOL division. Since both Microsoft and Yahoo have been mentioned as potential merger partners for AOL, a deal between the two would likely eliminate two potential merger partners leaving fewer likely suitors for AOL. On the positive side, Microsoft’s interest in, and the value that it has placed on, Yahoo suggests a possible upside for AOL, who, with falling subscription revenue, has assets that are increasingly comparable to Yahoo's. These are two important stories to watch.

The other top stories of the week:

• XM Satellite Radio (NASD: XMSR) said on Friday that it has settled a lawsuit filed by major label Sony BMG (NYSE: SNE) relating to the Pioneer Inno, a portable satellite radio with advanced recording features. The financial terms of the settlement were not disclosed. XM, which is in the process of merging with rival Sirius (as highlighted in last week’s column), now has settled with three music companies over its radios with recording functionality, following similar agreements in December with Universal Music Group and Warner Music Group.

• More Yahoo news: Maven Networks, a privately-held provider of technology for advertising on Internet video, announced that it will be acquired by Yahoo (NASD: YHOO) for about $150 million. Maven allows companies to tap new sources of revenue from Internet video advertising and syndication. The news, which came prior to the announcement of Microsoft’s bid for Yahoo, would be seem to be a positive move by Yahoo as it tries to complete with Google in the online video market.

• More mixed news for TiVo (NASD: TIVO): On Thursday, it was reported that the U.S. Court of Appeals for the Federal Circuit has upheld TiVo’s claim that rival EchoStar (NASD: DISH), operator of the DISH Network satellite TV service, was infringing on one of its digital video recorder patents, and must pay $74 million in damages, now $94 million with accrued interest. While TiVo’s shares have been climbing for most of the past year and seemed to be continuing to rise on news of the Court’s decision, the stock took a drop after a Friedman Billings analyst cut his rating on the stock to "Underperform" from "Market Perform."

• Online retail giant Amazon.com (NASD: AMZN) will acquire Audible.com, a distributor of audiobooks and other spoken word audio content, for $300 million.

• Over one-third (36%) of U.S. television households are unaware of the looming switchover to digital television broadcasting, set to take effect just over a year from now, while "major confusion" exists among the remaining consumers who are aware of the transition, according to a new survey from Consumer Reports National Research Center. This will be a topic of discussion at the prestigious Future of Television conference in Los Angeles in March.

• Microsoft (NASD: MSFT) has signed a deal with News Corp.'s (NYSE: NWS) Wall Street Journal Digital Network, to become the exclusive provider of contextual and paid search ads on sites including The Wall Street Journal Online, Barrons.com, MarketWatch.com and AllThingsD.com.

• Delivering a setback to the global music industry's legal campaign against illegal file-sharing, the European Court of Justice has ruled that EU countries need not disclose the identities of suspected file-swappers in the course of civil lawsuits. There will be more on this and the latest developments in digital music at the Digital Music Forum West at the beautiful Museum of Jewish Heritage in New York City, February 26-27.

• Qtrax announced the launch of what it claimed to be the first legal peer-to-peer file-sharing service with tracks from all the major labels. However, since making the announcement at the Midem conference in Cannes earlier in the week, all of the majors stated that they have NOT licensed Qtrax -- and the service remains offline. What’s going on here? As I said in my column last week, despite recent numbers showing a decline in the overall market for recorded music, don't expect the majors to jump too quickly to embrace new digital models. As long as there is a market for CD sales, you can bet on a cautious approach to unproven models like Qtrax. How to explain Qtrax jumping the gun on this announcement? Qtrax’s CEO Allan Klepfisz will be speaking at our Millennials Toronto event next month, so we’ll make sure to ask him.

• Current Media, the new media TV and Web video network founded by former Vice President Al Gore and Joel Hyatt, announced plans to file for an initial public offering (IPO) of shares that could raise up to $100 million. Current Media operates a cable TV network and website that feature a mix of professionally-produced and user-generated content, targeted at young adults.

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