Yahoo drops out of AOL bidding

Yahoo is no longer interested in buying a part of AOL after learning the terms of a potential deal.

Yahoo scuttled talks to take an interest in America Online (AOL) after learning the proposed terms of the deal, a company spokeswoman said Thursday.

The rejection narrows the field of suitors for AOL. Microsoft and Google have reportedly expressed an interest in the Time Warner unit, but no definitive deal has been struck. Yahoo's rejection of a deal came just two days after the company's chief executive officer (CEO), Terry Semel, and Time Warner CEO Richard Parsons met late last month in New York.

"We had a discussion with them to understand what their proposed deal terms were, but were not interested," the Yahoo spokeswoman said.

Rumors have also circulated that Comcast may be interested in a piece of AOL. While AOL has had a declining number of subscribers over the last two years, the company still had 20.1 million fee-paying subscribers in the U.S. as of Sept. 30. It also has dropped fees for much of its content and tried to take in more advertising revenue.

Google already has an agreement to provide search technology to AOL, while AOL in turn runs ads from Google's advertising network. An alliance by either Google or Microsoft with AOL is widely seen as a chance for those companies to capture a wider slice of online advertising.

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