Google, Comcast Mulling Stake in AOL

Updated at 11:15 PM PST:
So says WSJ…Google and Comcast are in “serious discussions” to buy a minority stake in AOL. The stake is for the online portal, not the dial-up service, the story says. Google approached Comcast about participating in a bid for AOL last week, but Google may end up making a bid on its own, the story says.

AOL’s total value may be about $10 billion (just for the content part, not the access part). AOL and Google already have a close relationship… last year, Google generated $300 million in revenues for AOL.

This follows talks between AOL and MSN on a combined venture or investment from MSN side…

Under one of the ideas being discussed, Google and Comcast would join together in a partnership that would own about 50% of AOL…Time Warner wants a controlling interest in AOL that it can consolidate on its income statement.

Comcast had talked to Time Warner about AOL separately, but..those talks were going nowhere until Google came along last week. Comcast has been talking to Google for about four months about some form of technology partnership. Comcast has been particularly interested in taking advantage of Google’s expertise in search for Comcast’s broadband and video offerings.

Bloomberg: Analysts’ estimates of AOL’s total value range from $11.9 billion by Soleil Securities Corp.’s Laura Martin to $21 billion by Sanford C. Bernstein’s Michael Nathanson. About 86 percent of AOL’s $8.7 billion in revenue last year came from its Internet access unit, which has lost 6 million subscribers in three years in the U.S. The rest comes from selling advertising on its sites.

AP: Under the deal, the three companies would form a new entity through which they would jointly own the Web portal, said a source in this story.

NYT: Both Comcast and Google approached Time Warner last month after word of Time Warner’s discussions with Microsoft was reported in the press. Indeed, Google’s CEO, Eric Schmidt, was in New York the day after the first report appeared in The New York Post and hastily arranged a meeting that day with Jonathan Miller, the CEO of AOL, and top officials of Time Warner.

Reuters: “Microsoft has had a head start,” the source said. “There have been deal terms and term sheets.” Google also has held discussions with Comcast on its high speed website strategy. Comcast aims to tap into the online advertising business as well as experiment in how it can translate its expertise in video distribution to the Internet.

Related:

AOL-MSN Start Talking Again On Combining

Why MSN Should Merge With AOL (and Why Google and Yahoo Have Little to Fear)

MSN-AOL: Deal Could Take Many Forms If It Happens At All

AOL-Microsoft: Will Cash-Rich Google Make A Play?

AOL-MSFT Talks: MSN Has Given Up On Portal?

AOL-Microsoft Talks: Google’s Exposure To It

Speculation Frenzy: MSN-AOL In Co-op Talks, Not Buyout?

Report: Microsoft Talking To TW About Combining AOL And MSN

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