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Search giant Google Inc. and U.S. cable operator Comcast Corp. are reportedly in negotiations to buy a small stake in America Online. In this potential deal, content is king.
The possible investment is in Dulles, Va.-based AOLs free Web portal, the home of a number of the Internets more popular features, and not AOLs dwindling number of Internet access customers.
By investing, Google and Comcast will get significantly better and easier access to the contents of AOLs thriving Internet portal, in particular its video-on-demand section, which they both plan to then use to attract more consumers to their own services.
The potential deal, detailed in several published reports over the last few days, is seen as a way for Google and Comcast to seriously challenge Yahoo Inc., which has the largest audience and advertising revenues of any of the portals.
Richard Parson, chief executive of Time Warner Inc., which owns AOL, on Thursday called the speculation “market rumor” during an appearance at a corporate event in Asia.
Both Google and Comcast, the largest U.S. cable operator, could benefit for some of the same reasons. Both would get an ownership stake in a revenue generating Web portal, plus better access to its content to provide its own broadband customers.
In addition, Comcast benefits because of the opportunity to convert AOLs existing Internet customers that still use a dial-up connection to Comcasts faster broadband services, and other features, like Internet telephony.
Microsoft is a wild card. The software giant, whose MSN Internet portal competes with AOL, has been in discussions with Time Warner about a joint venture with AOL itself.
The deal-making, which does not include AOLs dwindling numbers of Internet subscribers, reportedly began in the summer between Google and Time Warner, which owns AOL. About two weeks ago, Google approached Comcast about making the joint bid, according to the published reports.