Search engine will receive a 5% stake in Time Warner
Intense jockeying for AOL appeared to end late Friday with Google teaming with the Internet giant — for an eye-popping $1 billion.If the deal goes through — the Time Warner board is expected to vote on Google’s offer this week — Google will receive a 5% stake in Time Warner’s America Online unit and become its official ad partner. Key to the offer is AOL getting placement in Google searches, while Google would continue to serve as the paid-search-provider for AOL. The purchase would be a rebuff to Microsoft, until recently a front-runner for an AOL partnership. The Redmond, Wash., firm aggressively solicited AOL in the hope of luring paid-search ads away from Google. The drama leading up to the deal — with a longtime party (Microsoft) shut out at the last minute by Google — has parallels in Paramount’s 11th-hour triumph over Universal for DreamWorks a week earlier. The deal would also give Google its first stake in a media conglom; while not large, that stake could serve as a gateway to acquisitions. It is not clear how much of the $1 billion would be paid in cash. Pricetag is skewed by the fact that Google is probably willing to overpay to maintain its paid-search exclusivity with AOL. Deal also would raise questions over how a pure search engine like Google will be able to integrate content from a mostly proprietary company like AOL in its search results. For Time Warner, the small percentage does not follow the prescription of Steve Case, who last week advised a wholesale spinoff for the good of both companies. Still, the unusually large payment for such a small — and no controlling — stake would prove too appealing for most corporate boards to pass up. If approved, the sale represents a coup for TW chief exec Dick Parsons, who has been lambasted by Carl Icahn and others for not maximizing his company’s investment in AOL. Time Warner execs declined to comment on the deal.
Follow @Variety on Twitter for breaking news, reviews and more