By Laura Petrecca, USA TODAY
As media and tech suitors come calling for content and distribution alliances, Time Warner’s often scorned AOL unit is becoming the belle of the ball.
A possible joint bid from Comcast and Google for a minority stake in AOL is the latest scenario Time Warner is considering, according to two people with knowledge of the talks. Both emphasized the talks are preliminary and might not bring a deal.
Meanwhile, Time Warner also has had talks for several months with Microsoft’s MSN about an alliance or joint venture. And Time Warner has spoken with Google separately about a possible two-way deal, said one of the people.
Time Warner, Comcast and MSN all declined to comment. Michael Mayzel, a spokesman for Google, which currently provides AOL’s search technology, said he can’t comment on “rumored conversations,” adding that, “Google and AOL have a healthy global partnership.”
As companies clamor for advantage in the evolving media and technology landscape, Time Warner has to decide on AOL’s preferred dance partners. Details on the scenarios in play:
•A deal with Microsoft would increase MSN’s traffic and add value for advertisers. Microsoft likely would take a minority stake in AOL, and AOL would use its search technology, according to one of the people. JupiterResearch analyst David Card said this is a strong move by Microsoft to bulk up its online service and thwart rival Google at the same time. “Microsoft is trying to get AOL to block Google out,” he says.
• A solo partnership with Google would keep MSN out and let Google keep the ad revenue it gets from AOL use of its search. Loss of the AOL relationship would cut at least 5% from Google’s earnings per share, estimates Merrill Lynch analyst Lauren Rich Fine.
• Google and Comcast are talking about a stake in AOL’s ad-supported free portal and its instant-messaging service — not AOL’s dial-up service, said one of the people. Comcast, which has 21.5 million cable subscribers, and Google would both gain additional Internet content, such as AOL’s concerts.
In any partnership scenario, Time Warner likely would retain a majority stake, said one of the people. That’s smart, Card says, since AOL has a 9% share of the $9.3 billion in U.S. online ad spending and is poised to benefit as that market grows. Yahoo currently has 17%, Google, 14% and MSN, 12%.
Time Warner also has said it is considering selling a stake in AOL to the public. Any of these deals could give Time Warner a way to increase the value put on AOL. It’s under pressure to boost shareholder value as investor Carl Icahn buys up shares and demands better returns.