Yahoo! is considering buying a stake in America Online (AOL), joining other Internet powerhouses interested in the company's Web portal...
NEW YORK — Yahoo! is considering buying a stake in America Online (AOL), joining other Internet powerhouses interested in the company’s Web portal, a person close to the talks said yesterday.
The discussions were described as not as advanced as separate talks AOL parent Time Warner has had with Microsoft and Google, which is considering a joint bid with Comcast.
News Corp. has also expressed interest, but those discussions have largely ended, said the person, who spoke on condition of anonymity because the release of information was not authorized.
AOL’s talks with Microsoft have been ongoing since late spring, while the other suitors emerged after word of the talks leaked in mid-September, the person said. Time Warner is insisting on a controlling stake in any deal, the person said.
Most Read Stories
- Give to panhandlers or don’t? Some towns try cracking down
- Check out this new drone footage of the Bertha-dug Highway 99 tunnel WATCH
- Ex-Seahawk Marshawn Lynch watches Raiders game from the stands, rides BART train after being ejected
- A chilly La Niña winter likely in Pacific Northwest, but don’t fret about drenching of last year
- Seattle startup co-founder Matt Bencke was ‘a force of nature’ | Obituary
The interest in AOL comes as the company transforms itself from a declining business focused on providing dial-up access to a free content provider able to tap the recent boom in online advertising.
Late last year, AOL abandoned its longtime strategy of exclusivity and began making its rich offerings — including concerts, news, sports and e-mail — available through AOL.com for free, a model Yahoo! drove to become the Web’s top brand.
The Web portal side of AOL’s business is worth about $11.3 billion, based largely on AOL’s advertising potential, media analyst Michael Nathanson at Sanford C. Bernstein & Co. estimated in a research note.
According to Nielsen/NetRatings, Yahoo! had 99.3 million visitors in September, a figure that would have grown to 120 million with the AOL properties. AOL trails Yahoo! as well as MSN and Google with 72.5 million visitors.
Rob Enderle, an industry analyst, said Yahoo!’s interest in AOL appears defensive.
“It’s more of a block,” he said. “They are less interested in getting it themselves. They are more interested in crippling Google.”
Google would have most to gain from a stake in AOL.
It would give the Internet search leader a way to build a portal — and grow its advertising potential — while preserving an existing relationship with AOL responsible for more than 10 percent of Google’s revenues.
Comcast, if it joins the deal, would get entertainment content from AOL and opportunities to lure AOL subscribers looking to drop their dial-up connections for high-speed services like Comcast’s.
Beside blocking Google’s ambitions, Microsoft could create synergies from an AOL deal, Enderle said.
Microsoft’s MSN online division and AOL share many businesses, including an online portal, instant-messaging services and dial-up access.