Top executives at the media giant are talking about a move that could create a $45 billion entity, The Wall Street Journal reported.
Such a move would also give AOL a way to pay off AT&T for its 25.5 percent stake in Time Warner Entertainment, a cable and content partnership between the two companies, the report said.
AOL executives could not immediately be reached for comment.
AT&T has been trying to sell its stake in Time Warner Entertainment for about two years, but the companies haven't been able to settle on a price. AT&T broached the idea of selling off part of the cable division, Time Warner Cable, to the public last year.
New York-based AOL on Wednesday reported aof $54.2 billion for the first quarter, due largely to an accounting change that forced the company to write off much of the value of the AOL-Time Warner merger. AOL recorded revenue of $9.8 billion, up 4 percent from a year ago.