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When I interviewed him on Friday, Jim Riesenbach, SVP of AOL's Search & Directional Media group, was not permitted to talk directly about what would be the outcome of the much covered negotiations for a stake in AOL. He turned the routine and expected question into a thoughtful answer about how AOL would not be sought after unless its new strategy were paying dividends — so to speak.

Today come two articles, one from The New York Times (reg. req'd) and one from The Wall Street Journal (subscription req'd). Both articles suggest that what will ultimately emerge from the negotiations is something far short of the ownership stake earlier envisioned.

The WSJ piece says the following:

Time Warner Inc. is closing in on an agreement with Microsoft Corp. to build an online-advertising service designed to compete with Google Inc., say people familiar with the negotiations. After months of on-again-off-again negotiations, the two companies are now focused on a deal that would combine advertising-related assets €" with minimal, if any, money changing hands. An agreement is expected to be struck sometime before year-end, but it is still possible that AOL could choose instead to deepen its relationship with Google at Microsoft's expense. As of Monday, however, initial signs pointed to a Microsoft-AOL alliance, albeit one far less ambitious than many analysts and investors had expected.

Here's what The N.Y. Times is saying:

Time Warner is still in negotiations with Microsoft and Google over a variety of potential deals involving its AOL unit. But most of the possibilities under discussion do not involve either company's buying a stake in AOL, an executive briefed on the negotiations said yesterday. Rather, they would involve cooperation on Web search, advertising sales and possibly other areas, the executive said.

If Google loses AOL distribution it will be a blow to the company (and to AOL revenues), and MSN will gain a powerful distribution partner and more credibility for its PPC engine. None of this will necessarily change or overthrow Google's search leadership position on the consumer side, however.

If an actual sale does come to pass, it raises immediate questions about brands, products, culture and integration. That might be a bit more vexing for MSN-AOL than for Google-AOL. MSN and AOL both have strong positions in a number of overlapping markets (e.g., IM).

Until any announcement, however, all this remains the stuff of pure speculation.


More analysis from the Internet Stock Blog and Parsons says "AOL not for sale."

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