Time Warner Inc. now is dealing exclusively with Google Inc. in creating a broad new relationship with its Internet service, America Online, according to a report published Friday by The Wall Street Journal.
Shut out: Microsoft Corp., which had been seeking ways to combine aspects of its search services with AOL.
Also out of the picture now: Comcast Corp., the nation’s largest operator. A senior industry executive familiar with the negotiations told Multichannel News at the end of last week that Comcast is no longer involved. At one point, Comcast had been willing to be a partner in a joint effort with Google to buy a stake in AOL.
Time Warner has held talks with Microsoft since January about forging a relationship with the software juggernaut’s MSN search engine, as the media conglomerate has looked to accelerate AOL’s transition from a subscription-based service to one that depends more on advertising sales. Google, which already has an advertising relationship with AOL, entered the talks in September.
The report that Google was talking exclusively to Time Warner about an AOL deal was first reported last Friday.
According to the Journal, which cited a person close to the situation, the negotiations center around allowing AOL to sell advertising in the search results that Google provides on its Web properties. Google is also likely to promote AOL’s Web sites via sponsored links on its search results and would pay $1 billion for a 5% interest in AOL, the Journal reported.
The Journal reported that a deal could be reached as soon as this week, after Time Warner’s regularly scheduled board of directors’ meeting on Dec. 21.
Time Warner spokeswoman Susan Duffy declined to comment.
Google spokeswoman Lynn Fox did not return phone calls for comment.
Earlier this month, Microsoft was considered to be a front-runner for an AOL deal, primarily because it had agreed to guarantee AOL minimum ad revenue as part of the partnership. But Google, which derives about 10% of its annual advertising revenue from AOL, was said to be still in the running.
At the Credit Suisse First Boston Global Media Week conference Dec. 8 in New York, Time Warner Inc. chairman and CEO Richard Parsons said that AOL was in discussions with two companies about an AOL relationship. He declined to name the two parties involved.
Parsons all but ruled out one of the two parties taking a minority stake in AOL. In October, when news of the AOL talks broke, speculation was that either Microsoft or Google would pony up as much as $5 billion for a minority equity stake in AOL.
“We’re not a seller of assets,” Parsons said at the conference. “Beyond that, it depends how well these discussions work out.”
Also back in October, Google was said to have approached Comcast about participating in an AOL deal. While a cable industry executive familiar with both companies confirmed those initial talks, the executive also said that since then Comcast has dropped out of the negotiations. The executive said that Comcast could re-enter the picture at a later date, but no discussions along those lines have taken place.