Icahn to push Time Warner to sell AOL

Rumours are circulating that Carl Icahn, the dissident shareholder battling with Time Warner management, will next week come up with a plan to merge AOL with another major portal player.

We'll find out next week if the rumours are founded. Certainly Icahn has made it pretty clear that he'd like to see AOL spun off. Strategically this would be a mistake for Time Warner and buck the trend toward convergence between media and technology (particularly the internet), but for a short term share boost it might succeed.

The question remains who would merge with them? Google and Yahoo would be foolish to do so (they don't really need AOL unless it comes with significant rights to Time Warner content on exclusive basis, which would be a mistake for Time Warner) and so that just leaves MSN.

Microsoft may even be tempted, particularly as it would upset the AOL/Google apple cart. The only other possible players are Diller or Murdoch who would be unlikely to pay up.

So, Icahn may throw up suggestions till he goes blue in the face, but the options won't look that appealing right now. Better to let AOL develop a little more first. They should revisit spinning off AOL in 18 months if it is still not performing under Time Warner.