AOL Wooed By Comcast, Google?

Search giant Google and cable giant Comcast are reportedly negotiating to purchase a stake in Time Warner’s America Online unit, according to the Wall Street Journal. This follows on the heels of recent reports that Microsoft was interested in investing in AOL in a deal that would merge the MSN Internet portal with AOL. Those talks reportedly stalled in late summer.

Still an online powerhouse with millions of subscribers, AOL has been losing its core dial-up Internet service customers to higher-speed cable providers like Comcast and DSL providers like SBC. But even as its overall sales dipped 4 percent in the second quarter, advertising revenue made a 45 percent jump from a year ago and operating income increased by 33 percent. Companies such as Microsoft , Comcast and Google would be interested in AOL’s broad content portfolio and subscriber base.

The alleged deal with Comcast and Google would value AOL at around $20 billion. But any investment would be worth considerably less than that amount, because the companies want to specifically invest in AOL’s free Web portal. AOL’s dial-up operation, which charges monthly fees for Internet access and content, is responsible for the vast majority of AOL’s revenue to date.

If the companies do join forces, it would represent an impressive combination: AOL (and Time Warner’s) vast programming content, Google’s popular search and e-mail services plus Comcast’s own portal and expertise in video distribution and telecommunications. The big media players seem to be more willing than ever to do deals like Microsoft and Yahoo agreeing to make their instant message services interoperate and the RealNetworks/Microsoft alliance, both announced this week.

Apple was another media dealmaker, announcing today a surprise partnership with Disney today to sell episodes of Disney’s ABC television hit series “Desperate Housewives” and “Lost” at its iTunes online store.

A partnership between Google, Comcast and AOL would create a formidable challenge to Yahoo and Microsoft, with whom AOL is rumored to also be having separate discussions about a joint venture.

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