AOL Rumor Central: Microsoft and Yahoo on the Prowl.(negotiation for the acquisition of America Online Inc.)(Brief Article)

An unconfirmed report from the UK has Microsoft and Yahoo each negotiating to buy AOL from Time Warner. The theory is that either could combine its own portal operations with AOL and thus cut out a lot of operating cost. The New York Daily News said Time Warner CEO Richard Parsons would listen but then say, "Thanks but no thanks."

AOL seems to be on a comfort curve in recent quarters. Its "Bring Your Own Broadband" offering is doing well at $14.95 a month. Higher priced tiers are expected as the company adds content. AOL is thought to make more on AOL for Broadband than it did selling its $50-a-month full-service broadband offering that included an Internet connection.

Dial-up subscriber losses appear to have slowed. A consensus is growing that says that AOL's dial-up business will bottom out at about 15 million subscribers - hey, 15 million people paying $25 a month is a heck of a business especially when you add all the other money that comes from the ad revenue that those eyeballs attract. AOL is also trying to establish partnerships - so-called strategic alliances - with broadband providers around the world, both cablecos and the phone companies.

In any event, Time Warner is unlikely to make any AOL deal in which it would not maintain a significant ownership position. AOL is no longer the wounded duck that it was 12-18 months back. And Time Warner does not want to get caught in the "buy high, sell low" trap.