AOL deal drains away from Microsoft

A Time Warner executive, who refused to be named, has tipped off the New York Times that the company will not now sell a stake in AOL. Microsoft, the previous front-runner, is left negotiating a series of smaller cooperation deals involving advertising sales and Web search, says the NYT.

Both Yahoo and a Google / Comcast joint venture were said to be interesting in an AOL stake until Yahoo backed out.

According to the NYT: “Richard D. Parsons, the chief executive of Time Warner, could settle on a deal with one of the companies in the next week or two, said the executive, who described the state of the talks on condition that he not be identified because of the confidential nature of the deal making.”

Microsoft’s current surge into Web-based services will have to find another outlet.