Report: Talks between Microsoft and AOL heat up

Jul 16, 2008

By Michal Lev-Ram

The latest news out of Redmond is that a meeting between Microsoft (MSFT) and executives from Time Warner's AOL (TWX) will take place sometime today, according to a report in The Wall Street Journal.

This is not the first time talks to combine the two companies' online groups have reportedly taken place, but with Yahoo's (YHOO) annual shareholder meeting quickly approaching (it's now scheduled for Aug. 1), there could be renewed urgency for Microsoft to find an alternative to its failed buyout bid for the Sunnyvale-based Internet company.

AOL could not be reached for comment, and a Microsoft spokesman declined to comment on the reported meeting.

But Microsoft may not be the only company eyeing AOL. In April Fortune reported that Yahoo itself was in talks with the Time Warner subsidiary (Time Warner is also the parent company of Fortune and However, in June Yahoo cut a deal with Google (GOOG) to run some of Google's search ads on its Web properties, saying it expects to generate an additional $250 million to $450 million in cash flow. A senate hearing on the proposed Google-Yahoo ad deal took place in Washington D.C. this week.

Whether Yahoo is still interested in AOL - and how far AOL's reported talks with Microsoft will go - remains to be seen. But one thing is evident: AOL is willing to talk. Last March Time Warner CEO Jeff Bewkes said he was open to combining AOL with another company, in “whatever configuration makes it the strongest and the most valuable.

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