Web search engine giant, Google and cable operator, Comcast are considering purchasing a stake in America Online's Web portal, AOL owned by Time Warner.
Inclined to buy ownership stakes in Time Warner’s internet service provider, AOL together with Comcast for £2.9 billion ($5 billion), Google is looking towards tapping Web-based services of AOL, such as instant messaging and programming. It is being said that Google jumped at the idea for this deal on learning that Microsoft was also in discussions with AOL over a new internet venture.
Google received approximately 11% of its proceeds in the first-half of the year through a contract with AOL. It got in touch with Comcast in the past week to determine its interest in the joint deal, as the Philadelphia-based cable provider has been on the hunt for content in order to prevent ‘commoditisation’ of its cable connections.
Nevertheless, if this deal is completed successfully, it would effectively combine valuable services of AOL’s programming with well-known internet searches and services of Google, along with Comcast's speedy web portals, telecommunications and cable video distribution. Google’s success at receiving online advertisements as well as its tools’ supreme reach to people is definite to assist AOL to move towards the more lucrative ‘content business’ that would be paid for by advertising, from the loss-making dial-up internet services.
More importantly, what this deal would do is offer stiff competition to strong competitors like Yahoo Inc. and Microsoft.
Although talks are at an early stage, reports say that AOL’s content business has been estimated by Google and Comcast at $10 billion, and they intend to acquire a ‘minority share’ of about $5 billion, i.e. almost half of the entire business. Even so, its owner, Time Warner will still be holding the reins of the company by retaining the controlling stake. None of the parties, however, disclosed details of the deal.
A spokesperson at Google chose only to say, “Google and AOL have a healthy global partnership and AOL remains a valued partner.”
AOL has been Time Warner’s focus ever since Warner is battling issues with corporate billionaire investor, Carl Icahn who claims that shareholders at Warner were not being served fairly by the management.
A formal plan has still not been chalked out by Comcast and Google for investment in AOL.
Posted
on : Fri, 14 Oct 2005 00:35 GMT | Investments News
By : Pippa Fielding
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