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Facebook Should Buy Twitter

NEW YORK (TheStreet) -- Twitter (TWTR - Get Report) stock closed down 1.6% Tuesday. Not unusual, but not a good sign for shareholders in the Dick Costolo-led social media poser, particularly on a big rebound day for high-flying tech stocks.

I love Twitter the service; however it has its share of problems as a consumer/advertiser-dependent business.

Bearish takes differ depending on who you talk to (see, for example, this hack or TheStreet's Herb Greenberg), but many hold water and point to a company that hasn't quite figured out how to innovate past the evolution of Jack Dorsey's original idea (assuming it was actually his idea).

I have a solution that A) might sound crazy now, B) probably won't sound crazy if TWTR shares continue to free fall out into nothin' and C) I suggested as early as November 2012.

I don't quite understand why Twitter and Facebook haven't talked merger or, at the very least, partnership to this point. It makes perfect sense. If ego has stopped the two from getting together, that's just dumb. From a business standpoint, they're both doing investors a disservice.

If Comcast (CMCSA) can buy Time Warner Cable (TWC) ... if apparent rivals Rogers Communications (RCI) and BCE, Inc. (BCE) (formerly Bell Canada) can combine forces to purchase Maple Leaf Sports and Entertainment in Canada, a young punk (I mean that in a good way) and an in over his head CEO (I mean that in a not good way) can make a Facebook-Twitter tie up take place.

As I noted when I argued this point back in 2012:

Imagine being a local sales person or a regional or national rep walking into a client's office packaging Facebook and Twitter for a multi-platform buy. It would be like shooting fish in a barrel.

This is how the TV networks and groups of radio stations do business quite successfully.

If you're Clear Channel in Los Angeles, you can go to agencies and local advertisers with a package that hits every demo imaginable. These big companies even do sales partnerships with entities they do not own. Because it simply makes sense for, say, the Fox Sports Radio Network, to partner with Clear Channel's Premiere Radio Networks for programming, distribution and sales purposes. There's no reason why social media, at the scale of Facebook and Twitter, should be any different.

Instead of a lame, follow the crowd hyper focus on these God awful self-serve ads and "programmatic" advertising, a Facebook-Twitter union could go out and sell real and extraordinarily creative ad packages to clients from the mega agency level right down to the local auto dealer. You're walking in the door selling space across Facebook, Twitter, Instagram, WhatsApp, Vine (Twitter owns that right?) and who knows what else. Zuckerberg's building an empire. He could buy and sell Costolo a hundred times over. So it's time for Facebook to put Twitter out of its we'll just do what they did last year misery and get on with this.

They need to do it soon though.

At the moment a Facebook-Twitter merger probably wouldn't even raise bushy eyebrows with regulators. They're not sure what to make of social media. And the mobile advertising market is in its infancy so, with Google (GOOG) firmly entrenched as the leader there and names from Pandora (P) to Yahoo! (YHOO) nipping or set to nip at their heels, this doesn't look like a monopoly in the making. But it could be.

If I'm Zuckerberg Twitter's just another piece to my creepy puzzle.

He could boot Costolo who would walk away even wealthier, acting as if he won. That'll be easy for him, considering he now spends his time acting like he's a competent CEO. The Twitter service would likely improve as a user experience, just as Facebook has. But, more so, it's another cog in a splendid package to sell -- to actively, not passively sell -- to advertisers.

Facebook's next step would be -- buying either Pandora or Spotify (or both). At that point, the regulators might wake up. But Zuckerberg's so good he would promptly put them back to sleep.

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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