Time Warner Inc. and Microsoft Corp. have restarted discussions about forming an alliance of their Internet units, America Online and MSN, the Wall Street Journal reported on Friday, citing people familiar with the situation.
The two companies are focused on combining AOL’s Web content with Microsoft’s search-engine technology, although other aspects of the talks are sketchy. It isn’t clear whether they are considering merging their Internet dial-up businesses, which generate lots of cash, the paper said. (MSNBC is a Microsoft-NBC joint venture.)
The two companies originally began discussions about some sort of Internet deal earlier this year. But the talks stalled in the late summer over a range of issues including technical obstacles and questions about control.
Many obstacles remain to a deal, the paper said, citing people with knowledge of the discussions. Still, the latest talks have restarted in hopes of reaching an agreement by the end of the year.
One source said if a deal is not reached this year, it probably will not happen. Time Warner also is having conversations with other companies interested in partnering with AOL, the Journal reported, citing a person close to the situation.
The talks are being headed by Time Warner Executive Vice President Olaf Olafsson and Microsoft Senior Vice President Henry Vigil, according to people close to the situation.
Spokesmen for Microsoft and Time Warner declined to comment, the paper said.
Creating a joint venture, which could possibly go public, would be a way for both companies to benefit from high Internet stock-market valuations. A combination would also let Microsoft distribute its search engine to AOL users and supplant AOL’s relationship with Microsoft’s archrival, Google Inc.
