iHollywood

Fortune: Yahoo Approached Time Warner to Buy AOL

Multiple sources say Terry Semel, Yahoo's chairman and CEO, recently approached Time Warner about buying AOL--basically jump-starting talks that stalled last year. A source close to Yahoo disputes the claim.

That's the gyst of a report Fortune put on line over the weekend. It goes on to speculate that Semel's going to make a major acquisition soon--the reporters think he doesn't want to miss out on more hot properties like MySpace (acquired by News Corp) or YouTube (acquired by Google).

For students of business journalism, the piece invites speculation of another kind: Was being a Time Warner property helpful to Fortune's reporters in gaining access to Time Warner sources? (Not because of any Time Warner policy, but because of their proximity to the Time Warner rumor mill?)

Yahoo stock stands at 25.94.

--Benjamin Nugent

Can AOL Survive?

AOL's announcement today that it will cut 5,000 jobs, or a quarter of its workforce, underlines how much the online market has fundamentally changed. It's an open question whether AOL can adust to the new world.

Built on a paid subscription model, AOL must adjust to a world increasingly dominated by advertising-supported services such as Google and Yahoo. It lost a million subscribers in the second quarter, dropping to 17.7 million in the U.S.

This week, Time Warner confirmed the long-standing rumor that AOL will offer services such as  email, safety and parental controls for free. AOL opened up its portal and content to all last year.

But Google, Yahoo, and Windows are already offering and upgrading their free services.  Does the mass market really need another email client? AOL will need to effectively integrate AOL Mail and AOL Instant Messenger into its new portal to fully exploit the offerings.

AOL isn't dead by a longshot. Its online advertising revenue was strong in the second quarter, rising 40 percent to $449 million.

AOL Instant Messaging -- one of the world's leading IM clients -- is still the first thing millions of users see when they boot up. You can easily see how AOL might launch advertising-supported features like "IM this video to a friend", customized log-in pages and online identities.

Backed by Time Warner, AOL has the muscle to acquire  more top-tier content, just as MSN acquired the rights to Arrested Development. Adding new cult content to AOL's in2TV and other services will create a compelling user experience that will bring users back frequently, especially if content is updated regularly.

But MSN, Google, Yahoo! and Fox's MySpace are old hands in the free space. It remains to be seen whether Time Warner's aggressive moves are too little, too late.

--Josh Martin and Michael Stroud

See CNET's AOL to cut 5,000 jobs

Free AOL For All (Broadband Users)

It's official: Time Warner confirmed the long-standing rumor that AOL will offer services such as  email, safety and parental controls for free. The move has been long coming, since AOL opened up its portal and content to all last year. It's also necessary, since AOL can no longer afford to rely on subscriptions to drive its business.

Will these moves be enough to save AOL?

AOL's new mail services may appeal to some, but Google, Yahoo, and Windows are already offering and upgrading their services.  Does the mass market really need another email client? AOL will need to effectively integrate AOL Mail and Instant Messenger into its new portal to fully exploit the offerings.

AOL should consider incorpating such features as "IM this video to a friend" into AIM.  AIM users should have customized log-in pages displaying new content based on individual preferences.  This will require AOL to convince users to develop an identity around an AOL screen name -- one that can allow the company to offer recommendations, channels, a personalized home page, etc.

Since AOL IM often  launches when a computer boots up, AOL could be the first to influence a user each day. Offering a unique launch page may drive users right to AOL.com immediately. Doing so will help AOL generate the now even more important ad revenue that will drive the company by keeping users on AOL properties longer.

Additionally, AOL needs to acquire more top-tier content, just as MSN acquired the rights to Arrested Development. Adding new cult content to existing in2TV and other services will create a compelling user experience that will bring users back frequently, especially if content is updated regularly. Integration is key, and with advertisers bringing dollars back to Internet advertising, AOL stands a better chance at getting those dollars than consumer dollars.

See CNBC's Will Free AOL Lift Time Warner's Shares? http://moneycentral.msn.com/content/CNBCTV/Promos/P152262.asp