According to the New York Times, Microsoft is currently in the top position in negotiations with Time over an ownership stake in Time`s Internet unit America Online.The newspaper cited unnamed persons close to the negotiation.
The story reported that Microsoft hopes to fold its Internet service into a joint venture with AOL. The two online services have competed against each other for years.
A key issue for Time is whether ceding a stake in AOL to MSN would become too complicated a partnership, such as how much control would be ceded to Microsoft, the New York Times reported.
Other possible companies that have been previously reported to be in the running include Yahoo! Inc., News Corp. and a partnership of Google Inc. and Comcast Corp.
While AOL has regained some luster lately from a new Internet-based strategy and an upswing in Internet advertising — which in turn has attracted big-name suitors — the company has been the source of much criticism for acting as a drag on its parent, the old media giant Time Warner.
The widely expected synergy from the merger of new media and old media giants at the start of 2001 never played out. Ultimately over $200 billion in shareholder value was wiped out from AOL Time`s stock.
Among other problems, the once-highflying AOL has actually been losing subscribers to its ISP service in the last several years, dropping from over 30 million to a current estimate of around 20 million.
Time Warner now considers AOL a division of the larger company but has dumped the name from its overall title — a move that was hailed by the market at the time.
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