Dec 19, 2005
New York—Time Warner is expected to announce Tuesday that search giant Google will pay $1 billion for a 5% stake in AOL, according to reports.
Those reports indicate the two companies entered exclusive discussions Friday, exempting Microsoft Corp. from further talks with the media company. Both Google and Microsoft had been in discussions over the past few months with Time Warner regarding AOL. Several reports indicated that a Google deal was perceived as less risky for Time Warner than one with Microsoft Corp.
Merrill Lynch research analyst Lauren Rich Fine speculated in a research report published Monday that Google “could work strategically with AOL to strengthen its content offerings in order to power more search within AOL.”
“Maybe Google could even help AOL sell branded ads via its Site Targeting service?” she said. AOL would have much to offer Google as well. “This could give them a venue to enter into social communities, communication tools and the like and, again, drive traffic which will need a strong search component.”