Yahoo! to re-enter talks with AOL

by Staff, Brand Republic 24-Sep-08, 08:45

LONDON - Yahoo! is to again enter talks with Time Warner's AOL about a possible merger between the two struggling internet businesses.

The move comes as Yahoo! faces an investigation on two fronts over its controversial search advertising partnership with Google.

The talks between the two companies pick up where they left off earlier this year as Yahoo! cast around to find a partner to help it see off Microsoft's $44.6bn bid.

A talked-of $10bn merger between AOL and Yahoo! failed to materialise but, according to a report in the FT this morning, the green light for fresh talks came after Yahoo!'s board met for the first time since activist investor Carl Icahn and his two allies, former Viacom boss Frank Biondi and former Nextel head Frank Chapple, were given seats.

Parent company Time Warner has been thinking hard about the future of AOL and there has been speculation that the unit could be sold off. Jeff Bewkes, the Time Warner CEO, said last week while speaking at the Goldman Sachs Communcacopia Conference, that the future of AOL "will get decided fairly soon".

Reporting Q2 2008 results last month, Time Warner said AOL ad revenues declined 16% ($196m) to $1.1bn compared to the same quarter in 2007, reflecting a 29% decrease in subscription revenues wrought by its decision to scale down its ISP businesses.