RealTime IT News

Time Warner Nixes AOL-Microsoft Speculation

Time Warner on Friday dismissed a report that it was in talks to sell the America Online unit to Microsoft .

"There is just no truth to it," Time Warner spokeswoman Tricia Primrose said in response to a report in The New York Post.

The paper, citing unnamed sources, also said lawyers for New York-based Time Warner were examining whether such a sale would run afoul of antitrust regulations.

The report also claimed that the deal structure would include cash and the assumption of AOL debt, although a price range was not named. It might also include a Microsoft investment in Time Warner Cable, sources told The Post.

There has been some thawing of the relationship between the two companies. Last spring, Microsoft Chairman and Chief Software Architect Bill Gates called Time Warner Chairman and CEO Dick Parsons to extend an olive branch.

A few weeks later, Microsoft agreed to pay $750 million to settle a private antitrust lawsuit brought by Time Warner on behalf of its Netscape unit.

As part of the pact, Microsoft and AOL agreed to explore opportunities to jointly develop and support digital media technology and digital rights management (DRM) initiatives.

That work continues, although the companies have not released any information about what products or services are being developed, Time Warner's Primrose said.

The settlement was surprising since the companies have had an acrimonious relationship. In the mid-1990s, Microsoft's Internet Explorer browser supplanted Netscape's Navigator as the dominant player in the browser space.

Netscape's complaint that Microsoft was unfairly competing by tying its browser to its highly popular operating system formed the basis of the U.S. Department of Justice's antitrust suit against Microsoft.

Microsoft has 9 million subscribers for its MSN Internet service. AOL boast 24 million but is losing subscribers to broadband providers as well as cheaper dial-up ISPs. A Microsoft spokesperson, citing company policy, declined to comment on rumors.