Report: Microsoft and AOL Deal Close
Time Warner and Microsoft are close to an agreement on an advertising pact that would create a service similar to Google's AdWords program, sources close to negotiations told the Wall Street Journal Tuesday. However, there still is a chance talks could break down and AOL could opt to strengthen preexisting ties with Google.
The deal would ostensible combine the advertising departments of MSN and AOL's new portal business. An agreement is expected close to Christmas.
The proposed deal is not as far-reaching as many analysts had originally thought would occur. Under the current arrangement, MSN would replace Google as the search engine for AOL. No money is expected to be exchanged, primarily out of a desire by Time Warner executives to avoid assigning a value to AOL.
Hedge fund investor Carl Icahn has publicly criticized Time Warner's board and is looking to call for a shareholder vote to replace them. But forming a joint venture with MSN, no dollar figure would be announced, and it would give Icahn less fodder to stir up investor discontent.
Sources have told BetaNews in recent months that a key driver in discussions between the two entities is AOL's desire to use Microsoft's new AdCenter platform. The service allows for automation in the online advertising sales process, thus negating the need for large ad sales teams.
What won't happen, according to WSJ sources, is a Microsoft minority stake in AOL as earlier rumored. Redmond officials have so far declined to comment on the news.