NEW YORK (CNN/Money) - Time Warner is in advanced discussions to sell a stake in America Online to competitor Microsoft, according to a published report Thursday.
The New York Post reported that under terms being discussed, Time Warner (Research) would be equal partners with Microsoft (Research) in a combination of AOL and Microsoft's MSN Internet unit. Microsoft would give Time Warner some cash in the deal in addition to contributing MSN to it.
The paper reports that the companies are hopeful they can wrap a deal up within the next couple of months, but that Time Warner is also holding discussions with discussions with Internet search leaders Yahoo! (Research) and Google (Research) over a sale or venture with AOL in case the Microsoft negotiations fall apart.
Time Warner, the world's largest media company, was purchased by America Online, but the combined company's stock has performed badly since the January 2001 closing of the deal. CNN/Money is a unit of Time Warner.
Spokespeople for Time Warner, AOL and Microsoft were not available for comment on the Post report early Thursday.
AOL is profitable, reporting revenue of $8.6 billion and operating income of $1.1 billion in the 12 months ended June 30. But it has continued to lose subscribers, as customers leave its core dial-up service for high-speed Internet connections.
At the end of June it had 20.8 million subscribers, down 2.6 million from a year earlier and down 5.7 million from three years ago. The company is seeking to shift to a more advertising-based portal model, rather than one that depends upon subscription revenue.
Time Warner is under pressure by a shareholder group led by financier Carl Icahn, who is pushing for the company to sell some units and repurchase more outstanding shares in an effort to raise stock price. Icahn has suggested a sale of the company's cable unit, which Merrill Lynch estimates could fetch $40 billion, while it puts the value of AOL at only $8.8 billion.
But Mario Gabelli, whose Gabelli Asset Management owns more than 15 million shares of Time Warner, estimated at an investor conference earlier this month that if AOL's portal strategy is successful, the AOL unit could be worth $50 billion.
The pressure from Icahn increased Monday when he announced that his group, which holds a 2.6 percent stake in Time Warner, would seek seats on the company's board.
The Post also reports that Time Inc., Time Warner's magazine publishing unit, could be sold in 2006 if its performance doesn't improve.
http://money.cnn.com/2005/09/15/technology/aol_microsoft/
The New York Post reported that under terms being discussed, Time Warner (Research) would be equal partners with Microsoft (Research) in a combination of AOL and Microsoft's MSN Internet unit. Microsoft would give Time Warner some cash in the deal in addition to contributing MSN to it.
The paper reports that the companies are hopeful they can wrap a deal up within the next couple of months, but that Time Warner is also holding discussions with discussions with Internet search leaders Yahoo! (Research) and Google (Research) over a sale or venture with AOL in case the Microsoft negotiations fall apart.
Time Warner, the world's largest media company, was purchased by America Online, but the combined company's stock has performed badly since the January 2001 closing of the deal. CNN/Money is a unit of Time Warner.
Spokespeople for Time Warner, AOL and Microsoft were not available for comment on the Post report early Thursday.
AOL is profitable, reporting revenue of $8.6 billion and operating income of $1.1 billion in the 12 months ended June 30. But it has continued to lose subscribers, as customers leave its core dial-up service for high-speed Internet connections.
At the end of June it had 20.8 million subscribers, down 2.6 million from a year earlier and down 5.7 million from three years ago. The company is seeking to shift to a more advertising-based portal model, rather than one that depends upon subscription revenue.
Time Warner is under pressure by a shareholder group led by financier Carl Icahn, who is pushing for the company to sell some units and repurchase more outstanding shares in an effort to raise stock price. Icahn has suggested a sale of the company's cable unit, which Merrill Lynch estimates could fetch $40 billion, while it puts the value of AOL at only $8.8 billion.
But Mario Gabelli, whose Gabelli Asset Management owns more than 15 million shares of Time Warner, estimated at an investor conference earlier this month that if AOL's portal strategy is successful, the AOL unit could be worth $50 billion.
The pressure from Icahn increased Monday when he announced that his group, which holds a 2.6 percent stake in Time Warner, would seek seats on the company's board.
The Post also reports that Time Inc., Time Warner's magazine publishing unit, could be sold in 2006 if its performance doesn't improve.
http://money.cnn.com/2005/09/15/technology/aol_microsoft/
