Global software titan Microsoft appears to be leading the pack to win a stake in Time Warner's internet unit, America Online.

Sources 'close to negotiations' told the New York Times that Microsoft aims to fold its MSN internet service into a joint venture with AOL [WAMN: 19-Sep-05], but that any agreement is still several weeks away.

Watching the proceedings with interest are Google, cable operator Comcast, Yahoo and News Corporation. All are ready to intervene if the Microsoft deal fails to materialise. One sticking point could be TW's reluctance to give up its controlling interest in AOL.

TW's ceo Richard Parsons has acknowledged that the company is in talks with Microsoft [WAMN: 07-Nov-05] but remains vague on the details: "Because the discussions are fluid, we don't know if they will result in any transaction or what form any transaction will take."

Outside investment could help place a higher value on AOL's business - something that might help it appease TW's disgruntled shareholders, particularly Carl Icahn, who has built a 2.9% stake in the media giant and has criticized its management and board.

Data sourced from International Herald Tribune; additional content by WARC staff