The source confirmed a Wall Street Journal story saying Yahoo would receive a cash investment from Time Warner in exchange for a 20 percent stake in the combined Yahoo-AOL business. The deal would exclude AOL's fading dial-up Internet access business and value AOL at about $10 billion.
SAN FRANCISCO (Reuters) - Yahoo Inc <YHOO.O> and Time Warner Inc <TWX.N> are "closing in" on a deal where Yahoo would merge with Time Warner's AOL Internet unit, brushing aside Microsoft's bid for Yahoo, a source familiar with the talks said on Wednesday.
The source confirmed a Wall Street Journal story saying Yahoo would receive a cash investment from Time Warner in exchange for a 20 percent stake in the combined Yahoo-AOL business. The deal would exclude AOL's fading dial-up Internet access business and value AOL at about $10 billion.
A deal with Time Warner and AOL would be part of a multi-pronged strategy by Yahoo in which it would outsource Web search advertising operations to Google Inc <GOOG.O>, the source said.
Separately, The New York Times reported that Microsoft and Rupert Murdoch's News Corp <NWSa.N> are in negotiations on making a joint bid for Yahoo. That merger would join Yahoo, Microsoft Corp's <MSFT.O> MSN and News Corp's MySpace, the paper said.
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