The Atlanta-based Baby Bell was one of numerous companies to enter discussions with PointCast shortly after it filed its initial public offering plans in May, the sources said.
Sources cautioned that
Both PointCast and BellSouth representatives declined comment.
PointCast drew a little closer to BellSouth in the fall, sources said.
The company was looking for interim financing in October. BellSouth and some other major telecos submitted their proposals, and PointCast chose BellSouth, the sources said. For now, the plan is to sell PointCast outright, although the deal could be scaled back to include a substantial investment.
In addition, interest from other major telcos is strong and could affect the final outcome, sources said.
PointCast directors are expected to meet next week, but the timing for completing any deal is hard to predict, sources said. Executives hope to wrap up an agreement by year's end, however.
Industry analysts have been wondering when PointCast would strike a partnership since the company pulled its IPO. Many had thought a deal would have been clinched by now.
Much attention has focused on PointCast striking a deal with a media company, such as Time Warner. PointCast broadcasts news and corporate information to users' desktops from such sources as CNN.
Some analysts thought PointCast missed a golden opportunity to sell out to Rupert Murdoch's News Corporation for a reported $450 million last year. Some sources speculated that they expect any sale of PointCast to be worth much less at this point.
The company's technology has not caught on to the degree that was expected, partly because of concern by corporate customers that using PointCast will slow down their networks. But company executives say they have addressed the problem.
CNET News.com's John Borland contributed to this report.