The news comes as AOL, whose core dial-up business has been long viewed as an albatross for parent Time Warner (TWX - Get Report), has suddenly emerged as a hot property on the fast-changing Internet landscape.
Talks among Time Warner, Google (GOOG - Get Report) and Comcast (CMCSA - Get Report) continue, according to people familiar with the talks. Those discussions were spurred by news last month of talks between Microsoft's (MSFT - Get Report) MSN and AOL. These people say those talks continue.
Time Warner reps aren't commenting on the state of any discussions, and Yahoo! didn't immediately return a call seeking comment. At a conference this week in Hong Kong, Time Warner CEO Dick Parsons declined to comment on any discussions. Sources say he neither denied nor confirmed that talks were going on, contrary to reports Thursday that suggested the chats were off."All of the Internet portals want content, especially video content," says a media industry analyst. This analyst noted that content is expensive to produce and that a tie to Time Warner's content through an AOL deal could be a boon to various players. The talks point to a huge metamorphosis in the media business, with Internet companies moving into various aspects of content creation and vice versa. Meanwhile Time Warner faces increasing pressure from restive investor Carl Icahn to return money to shareholders and otherwise shake up what he has characterized as a mismanaged company. "I think Time Warner's interest is in maximixing the percieved value of AOL as it relates not only to the stock price and Carl Icahn but to cultural and other legacy issues," says Marshall Front, chairman of Front Barnett Associates, which holds a $30 million stake in Time Warner. "It is in their interest to get as many bidders as they can." Front, who doesn't expect anything to be finalized soon, says he feels it is important for Time Warner to move beyond some of the legacy hangovers that continue to inhibit the company. Google's interest in an AOL stake has been described as a "defensive move," given the companies' current advertising partnership and Google's interest in preventing a broad partnership between MSN and AOL.