Report: AOL, Google Now In Exclusive Talks (sub. req.)

Update: The Journal is now reporting that Google would pay Time Warner $1 billion for a five-percent stake in AOL. That would justify TW’s $20 billion valuation of AOL … More to come.
AOL is now in exclusive talks with current search partner Google and Microsoft is out of the picture, according to the WSJ. Any deal likely wouldn’t be completed until after Time Warner’s board meeting next Wednesday. The deal now under discussion “would allow AOL to sell advertising among the search results provided by Google on its Web properties. Google is also likely to promote AOL’s Web properties among the sponsored links in its search results.”
The Journal attributes the info to “people close to the situation” but there’s no indication of whether the sources have something to gain by floating the story now. If true, it would be a win for Google, which get more than one-tenth of its revenues from AOL, and a blow to Microsoft’s nascent MSN search advertising business. No comment from Google or Time Warner; no response yet from Microsoft.
Marketwatch: Blake Warner, investment banker, Thomas Weisel Partners: “”Why would Time Warner shareholders be happy sharing some of AOL ownership? What does AOL suffer from? It suffers from a declining dial-up subscriber base. Time Warner is still stuck with that.”

Reuters: Richard Greenfield, independent analyst: “AOL would have been a huge opportunity and a natural fit to jump start that business for Microsoft. If Google has boxed Microsoft out, it begs the question: How is Microsoft going to flourish online?”
Related: AOL-Microsoft Talks: Google’s Exposure To It

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