Yahoo! Drops Out of AOL Purchase Negotiations

Nov 10, 2005  •  Post A Comment

Yahoo! has pulled out of talks to buy a stake in Time Warner’s America Online unit, balking at Time Warner’s insistence that the media giant retain a majority stake in the online service.

News of Yahoo’s withdrawal, first reported Thursday by The Wall Street Journal, comes as Time Warner is fielding offers from a number of big-name online players, all of which are interested in gaining access to AOL’s more than 90 million Web visitors at a time when online advertising is soaring.

According to published reports, a Yahoo spokeswoman confirmed that Yahoo CEO Terry Semel held talks with Time Warner CEO Richard Parsons, but said Yahoo walked away after learning that Time Warner had put deal terms on any potential transaction, including Time Warner’s demand that it keep a majority stake in AOL.

The Journal described Microsoft and Google as being the furthest along in discussions with Time Warner, with much of the discussions focusing on Microsoft and Google linking up their respective search services with AOL. While a deal structure has yet to emerge, one scenario has Comcast joining forces with Google to buy a stake in AOL.