A Yahoo acquisition of AOL could happen as early as this month, TechCrunch reported Monday, citing sources close to the negotiations.
"It's rumors and speculation, which we don't comment on," Yahoo spokesman Brad Williams said. Update 2:30 p.m. PDT: AOL also declined to comment.
According to the report, Yahoo would buy AOL's content business, but not its dial-up subscription business. Time Warner had separated the two, and given Yahoo's online-publishing and advertising interests, it would be no surprise to see Yahoo pass over that dwindling asset.
The possibility grew out of Microsoft's unwelcome attempt to acquire Yahoo, but some would be surprised to see any deal at all. In a note on Monday, Sanford C. Bernstein analysts said the deal is unlikely for three reasons:
• Stock transactions over $3.4 billion are dilutive to Yahoo. We think Time Warner was hoping for $6 billion to $8 billion, which is only possible with synergies.
• The primary source of synergies is staff reductions, where Yahoo has (an) unimpressive track record. Other benefits, such as pricing power in display and combining Advertising.com with Right Media Exchange, will not drive short-term incremental revenues.
• Regulators might not allow the AOL-Google paid-search deal to pass to Yahoo, which would wipe out the other synergies--creating a large risk for both sides.