• by Wendy Davis  @wendyndavis, October 13, 2005

Speculation that Time Warner intends to sell off a stake in AOL mounted Wednesday, after reports surfaced that Google and Comcast were considering making a bid for the company.

Wednesday's reports came about four weeks after the New York Post wrote that Microsoft was talking with Time Warner about buying an interest in AOL in order to combine it with MSN. Those talks stalled, but restarted last week, according to The Wall Street Journal.

But Wednesday morning, after Yahoo! and MSN announced a deal to make their instant messaging services compatible (See related OnlineMediaDaily story, "Yahoo, MSN To Mesh IM Networks"), a joint MSN-AOL venture looked less likely.

By Wednesday afternoon, The Wall Street Journal and Reuters reported that Google and Comcast were in talks with Time Warner to buy a stake in AOL.

The stakes for all companies are high, as a merger between either AOL and Google or AOL and MSN would create an online behemoth, according to Nielsen//NetRatings. An AOL-Google match would attract 107 million unique visitors--giving the resulting property a reach of 72 percent, while an AOL-MSN merger would draw 118 million unique visitors and give a reach of 79 percent.

For Google, the deal would also give the company a foothold in the original content business. Google, which recently raised $4 billion--bringing its cash reserves to $7 billion--has been expanding beyond its original business of search. The company recently submitted a proposal to provide free WiFi to San Francisco; Google also recently launched a beta version of its own instant messaging service, "Google Talks."

A Google stake in AOL also would preserve the chunk of Google revenues attributable to AOL--which currently uses Google for search. If AOL were to stop using Google search--a likely result of an AOL-MSN merger--Google's earnings would take an estimated hit of between 5 and 10 percent, according to a recent Merrill Lynch report.