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Who Would Want AOL Now?

Andrew Ross Sorkin|The New York Times
Monday, 4 Feb 2008 | 10:51 AM ET

AOL is looking pretty lonely these days.

At first blush, Microsoft’s bid for Yahoo might seem to make AOL more attractive to potential buyers — if only because it could force other big Web players to consider drastic moves of their own, including acquisitions. So far, however, the sentiment among analysts seems to be going the other way. Many industry observers say the chances of a deal for AOL appear slimmer than ever, in large part because Microsoft and Yahoo, widely seen as the likeliest suitors, may be pairing off themselves.

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"We believe AOL is the odd man out," Anthony J. DiClemente, an analyst at Lehman Brothers, said in a research note.

Richard Greenfield of Pali Research, writing Monday on Pali’s blog, posed the query, "Who Would Want to Buy AOL in the Wake of a MSFT/YHOO Marriage?" and then quickly answered his own question: "Probably no one."

Time Warner has never said that AOL is for sale, but there has been rampant speculation for years that it might eventually go on the block. The chatter has gotten louder now that a new chief executive, Jeff Bewkes, has taken over at Time Warner.

AOL has some attractive assets, including the celebrity gossip site TMZ.com and the ticket-buying service Moviefone, Mr. Greenfield wrote. But the growth prospects for its Internet-access business are grim, and the content on AOL.com and its related sites becomes "less exciting by the day," he added.

Despite all this, Mr. Greenfield does allow himself to indulge in a bit of speculation about some possible buyers for AOL.

His list includes the cable company Comcast, which he says might want to build out its Internet access business with some content. In the end, though, he concludes that "it’s hard to imagine Comcast wanting to (or having the guts) to pay over $10 [billion] for a slowly declining business that is outside its core competencies."

News Corporation is no stranger to daring acquisitions. Might Rupert Murdoch try to combine AOL with MySpace, the social-networking site? Though it has been widely reported that Mr. Murdoch was interested in some kind of deal between MySpace and Yahoo, Mr. Greenfield dismissed an AOL-MySpace match-up as "toxic."

And then there is Google, the Web giant whose dominance is the driving factor behind Microsoft’s Yahoo bid. Though Google already owns 5 percent of AOL, Mr. Greenfield said it is not easy to see why such a successful Internet player would want to own a small and floundering competitor — unless it were simply to keep it out of the hands of a combined Microsoft-Yahoo.

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