This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
ePal? PayBay?

News of eBay's intention to acquire PayPal for $1.4 billion(-ish) blanketed the news outlets like an East Coast heat wave yesterday and today.

A number of venues ran stories derived from AP or Reuters early yesterday -- the announcement caught "many reporters and analysts in their pajamas," as Ina Steiner wrote on AuctionBytes -- and followed up today with bylined coverage. Even today some of the articles had a rushed feel, as if reporters couldn't tumble the words out fast enough. The Wall Street Journal's piece was uncharacteristically rough -- it claimed that eBay's goal in incorporating PayPal into its site was to "further increase transaction times" and noted a recent secondary stock offering in which PayPal insiders "sold $114 million shares."

On its face, the deal makes sense for eBay. Sixty percent of PayPal's business already comes from the premier auction site (and another 10% to 15% from online gambling sites, a business that eBay said it will drop). was not so sure. The deal as announced put an 18% premium on PayPal shares, but they ended yesterday up only about 8%, keeping pace with eBay's drop of 7% on the day.

Though eBay executives stated in their announcement that PayPal will continue to run independently (as become integrated more closely with the eBay site), several reporters caught eBay sellers in a worried frame of mind. CNET's Troy Wolverton quoted a seller of books and collectibles: "My auctions are supposed to be my business. I don't want eBay having total control of (them)." AuctionBytes reported both "concern among sellers ... that eBay would raise fees for using PayPal," and buyers who do not like the idea that "their off-eBay activities conducted through PayPal will be accessible to eBay once the acquisition is completed."

The New York Times caught eBay's CFO saying words that seem to lend credence to these eBay customer's worries: "This has the potential to expand the definition of eBay. We are now able to work with sellers and merchants -- and not just on eBay," said Rajiv Dutta, eBay's chief financial officer.

A number of stories touched on Wells Fargo Bank's role on the sidelines of this deal, noting that in 2000, eBay had brought in the bank as an investor in its recently acquired Billpoint service, then bought back control early this year. (Now, of course, Billpoint will fade away.) Only a few outlets, including the AP and Forbes (and a Slashdot poster), mentioned that last month Wells Fargo had agreed to handle processing of PayPal's credit card settlements, potentially disentangling it from beefs with Visa and Master Card.

Last word goes to a Slashdot wisenerd: "It was almost mine. Damn! eBay sniped me in the last 20 seconds." - Keith Dawson

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