Web search engine Google and cable company Comcast's possible stake in Time Warner's America Online would be worth as much as US$5 billion ($7.25 billion), sources say.
The discussions concern only AOL's portal content - including news and entertainment - and not its dial-up internet access business, another source says.
An investment would set the stage for an alliance marrying Time Warner's trove of programming and Google's popular search and email services with Comcast's high-speed internet portal and experience in cable video distribution and telecommunications.
It would also create a powerful new challenge to internet media company Yahoo and software giant Microsoft.
In once scenario, Google and Comcast would jointly own half of the AOL web businesses, though Time Warner would retain a controlling stake, the Wall Street Journal reported.
Google and Comcast are valuing AOL's content business at about US$10 billion, which implies a valuation of as much as US$5 billion for the minority stake, the Journal says.
One source close to the deal, however, says that Google and Comcast could make an investment in the entire AOL business.
Google and Comcast face competition from Microsoft, which is also holding talks with AOL, one source says. Time Warner and Comcast declined to comment. A Google spokesman also declined comment, saying only: "Google and AOL have a healthy global partnership and AOL remains a valued partner."
Time Warner, which has faced criticism over its strategy from billionaire investor Carl Icahn in recent months, sees AOL as a centrepiece to its future growth.
The talks between AOL, Google and Comcast progressed over the northern summer, but one source warned that the talks were still in early stages and could fall apart.
AOL contacted Comcast first, then held separate talks with Google over potential investments, the sources say.
Google, which derived about 11 per cent of its first-half revenues from a deal with AOL, has discussed interest in AOL's free web-based services, such as instant messaging and programming.
Also, Google contacted Comcast last week over possible interest in executing a joint investment, one source said.
Since then Google and Comcast have discussed taking a joint minority interest in the online unit of Time Warner.
- REUTERS
