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AOL Mulling Breakup, Yahoo Merger?

The will-they-or-won’t-they dance between AOL and Yahoo seems to be getting more complicated, with Reuters reporting that AOL is considering a “complicated series of transactions” that will see the company casting off its long-moribund dial-up business and merge its content and advertising based businesses with rival Yahoo. As with most rumors surrounding the combination of the two companies, some industry watchers believe the whole notion is nonsense, noting AOL’s businesses don’t offer a great deal that Yahoo doesn’t already have. However, others note that AOL does control a significant content network of well-trafficked sites—including the likes of Engadget and TechCrunch—and that if AOL had Yahoo backing its advertising business, it could more easily shed its lingering dial-up access business.,

Reuters characterizes the plan as in “exploratory stages” and says Yahoo has not been approached about the idea. The report is the latest development since AOL reportedly hired new financial advisors to explore strategic options for the company.

AOL has previously considered spinning off its dial-up business: in 2008, reports had U.S. ISP Earthlink considering acquiring AOL’s dial-up access business part of a broader move to combine dial-up business of formerly-mighty dial-up Internet access providers. AOL has been interested in getting rid of its dial-up business for some time: although AOL was once the largest Internet access provider in the United States, the dial-up access business has been in decline for some time as users switch to broadband offerings, and AOL has been working to recast itself as a media and advertising company rather than an Internet access provider.

AOL has declined to comment on the report, and sources within Yahoo have repeatedly indicated the company is not looking for any proposals from AOL. Previous reports of potential mergers with Yahoo have hinged on the company selling its interest in its Asian businesses, including Yahoo Japan and its 40 percent stake in China’s Alibaba group. Despite frictions with Alibaba, Yahoo CEO Carol Bartz has indicates Yahoo has no plans to sell off its Alibaba stake.

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