Microsoft in Talks to Acquire AOL?

According to sources, Time Warner Inc. is in discussions with Microsoft Corp. regarding a potential acquisition by the Redmond software company of America Online (AOL).

New York-based Time Warner on Friday denied the account. And a Microsoft spokeswoman said the company will not comment on rumors or speculation.

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Time Warner spokesperson Tricia Primrose Wallace called the New York Post story "inaccurate." "Some parts such as the agreement about working with them on digital rights management are correct. Whats inaccurate is that were in some sort of talks with them about selling AOL," Primrose said.

However, a source with ties to Time Warner told Microsoft Watch that rumor is on the money.

"AOL is on the block at Time Warner, theyve been talking to Microsoft about it for some time," said the source, who requested anonymity. "Apparently, the discussions have been going on for at least three months. They [Microsoft and AOL] have had different on-and-off periods of discussion about this."

The source noted, however, that Microsoft is not the only AOL suitor. "The large cable networks, such as Comcast, are also looking at AOL, so they can bundle it with their cable modem access," the source said.

The reports of the negotiations were sparked by a New York Post article in its Friday edition. According to the Posts story, "the deal being discussed within Time Warner would include Microsoft paying cash plus the assumption of debt to acquire AOL."

The story added that, according to sources, "a possible investment by Microsoft in Time Warner Cable has also been considered." To read the full article, click here.