GOOG may have slight advantage over MSFT for AOL deal, YHOO drops out:
Yahoo Quits Race for AOL Stake
Talks With Time Warner
Did Not Bear Fruit;
Google, Microsoft Remain
By KEVIN J. DELANEY and JULIA ANGWIN
Staff Reporters of THE WALL STREET JOURNAL
November 10, 2005; Page A3
Yahoo Inc. says it has dropped out of the running to buy a stake in Time Warner Inc.'s America Online Web portal and content activities.
Yahoo Chief Executive Terry Semel met with Time Warner chairman Richard Parsons in New York to discuss a possible deal in late October, according to people familiar with the matter.
A Yahoo spokeswoman acknowledges there was a meeting, but denies Yahoo ever made any offer. "After we learned what their proposed deal terms were we passed and we've never looked back," said the spokeswoman.
Another person familiar with the matter said Time Warner, which is in talks with Yahoo rivals Google Inc. and Microsoft Corp. over selling a stake in AOL, signaled that it wasn't interested in the terms Yahoo was willing to offer. A Time Warner spokesman declined to comment.
Google and Microsoft are apparently neck and neck in the discussions, the people familiar with the matter said, and Time Warner is expected as early as next week to select one partner with which it will enter exclusive negotiations.
The battle for AOL reflects the hot Internet advertising market. Although AOL has been losing subscribers to its dial-up Internet-access business, it still attracts 110 million U.S. visitors a month to its Web and online properties, and AOL accounts for about 10% of the online advertising market.
Google has a close relationship with AOL, providing search technology to AOL and giving AOL a cut of the advertising revenue generated by those searches. AOL earned $300 million from the Google arrangement last year.
Microsoft, which is battling to overtake Google in search technology, has been wooing AOL since January, hoping to persuade AOL to switch to using Microsoft's MSN search engine rather than Google's. During the course of the year, those discussions evolved to a point where Microsoft and AOL were discussing a joint venture in which they would combine their Internet assets into a publicly traded entity.
However, a person close to the negotiations said, the AOL-Microsoft discussions about a joint venture became bogged down recently. One thorny issue that has arisen: some executives at Time Warner are concerned about antitrust implications of combining the two Internet access businesses. Another issue, the people said, is that it is difficult for Microsoft to figure out how to separate its MSN business from the rest of the company, which is becoming increasingly Internet-oriented.
One person close to the deal said that for these reasons, an AOL combination with Microsoft is less likely to be a joint venture as originally envisioned, and more likely to be a partnership on smaller scale. A Microsoft spokeswoman declined to comment.
In the meantime, people close to the negotiations said Google has made significant strides in its negotiations with Time Warner -- and that Google's talks are nearly as far along as the Microsoft negotiations, despite having only started talks in September. Google is willing to buy a minority stake in the entire AOL division, including AOL's declining dial-up Internet access business, according to one of the people familiar with the situation. "AOL is a valuable global partner, but your questions are based on rumors so we can't comment any further," said a Google spokeswoman.
Under one scenario being discussed, cable giant Comcast Corp. would join Google in the late stages of any negotiations for an AOL stake, according to the people familiar with the talks. A Comcast spokeswoman declined to comment.
Write to Kevin J. Delaney at kevin.delaney@wsj.com and Julia Angwin at julia.angwin@wsj.com |
