IP Democracy: AOL-MSN Talks Active Again

The WSJ reports that ” Time Warner Inc. and Microsoft Corp. have restarted discussions about forming an alliance of their Internet units, America Online and MSN, according to people familiar with the situation.”

The two companies are focused on ways to combine AOL’s Web content with Microsoft’s search-engine technology, although other aspects of the talks are sketchy. It isn’t clear, for instance, whether they are considering merging their Internet dial-up businesses, which generate lots of cash. As of June 30, AOL had 20.7 million dial-up customers while Microsoft had 2.7 million.

Many obstacles remain to a deal, according to people with knowledge of the discussions. Still, the latest talks have restarted in hopes of reaching an agreement by the end of the year. “If you can’t get it done in calendar year 2005, then it’s probably not going to happen,” says one person involved in the negotiations…Time Warner is having conversations with other companies interested in partnering with AOL, according to a person close to the situation.

In a blog post and research report that analyzes some key financials, former high-flying Wall Street analyst Henry Blodget argues that “[i]n the absence of disastrous mistakes by Google and Yahoo!, Microsoft’s best chance to win with MSN is to merge it with AOL and spin it off.”

Posted by Mitch Shapiro on October 7, 2005 11:50 AM to IP Democracy