Time Warner in talks over AOL sale

Time Warner, the world's largest media company, ended weeks of fevered speculation yesterday by confirming it was in talks with various parties over the sale of its struggling internet arm, America Online.

Dick Parsons, the chief executive of the sprawling media group, said there were "exploratory discussions" with a number of parties about buying all or part of AOL. The parties are thought to include internet companies such as Google and Yahoo!, the cable giant Comcast and Microsoft.

Mr Parsons cautioned investors that the talks were still "fluid", and might not lead to a deal. His public confirmation of a possible deal is a reversal from Time Warner's earlier position that it wanted to retain its internet business at a time when its business model was being changed.

AOL is being transformed from an old-style service to access the internet into a portal offering music and news. Subscribers are no longer interested in sites offering only internet access, and advertisers are far keener to place ads with portals, which are enjoying rapidly rising internet traffic.

Time Warner could sell all of AOL, though it might prefer to retain a stake to take advantage of what it hopes will be strong growth of its portal business. The company reported an 80 per cent surge in third-quarter profits to $897m (£505m), boosted by a strong performance at HBO and its other television networks.

Time Warner said it would more than double its share buy-back to $12.5bn of stock, after intense pressure from the billionaire investor Carl Icahn. He was pressing for a $20bn repurchase scheme to revive Time Warner's flagging share price.