According to Tim Arango in the NY Post:
In a deal that would unite two of America’s corporate giants as partners in the Internet business, Time Warner is in advanced discussions to sell a stake in America Online to Microsoft, The Post has learned.
According to two sources familiar with the matter, Time Warner is in talks with Microsoft about selling the stake in AOL and then combining it with Microsoft’s Web unit MSN.
Under the plan being considered, Microsoft would pay some money to Time Warner for the AOL stake, leaving the two companies approximately equal partners in the venture.
While the deal could fall apart, the companies are hopeful they can wrap it up within the next couple of months.
It’s rather hard for me to imagine how this could be a good deal for Microsoft.