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Yahoo Decides To Sit out Of AOL Race; Exclusive Negotiation Period Nearing

Not really a surprise, considering how much overlap there is in the two companies…besides he asking price, of course. Yahoo CEO Terry Semel met with Time Warner chairman Richard Parsons in New York to discuss a possible deal in late October, but decided to pass on it after figuring out the deal terms. Time Warner also didn’t like the terms Yahoo was presenting, according to the story.

Google and Microsoft are apparently neck and neck in the discussions, said the story, and Time Warner is expected as early as next week to select one partner with which it will enter exclusive negotiations.

On the MSFT-AOL talks, some issues about anti-trust have arisen, the story says. Also, divorcing MSN form MSFT might be difficult, so it might end up being a joint venture rather than a complete spinoff of AOL+MSN.

On the Google side, Google is willing to buy a minority stake in the entire AOL division, including AOL’s declining dial-up Internet access business, says the story.