NEW YORK -- AT&T Corp., looking to fend off an unsolicited suitor for its cable business, is in preliminary talks with AOL Time Warner Inc. about a friendly deal to merge the two companies' cable-systems operations, the Wall Street Journal reported in its online edition on Wednesday.
Citing people familiar with the matter, the newspaper reported that the talks between the No. 1 and No. 2 cable companies, respectively, come two weeks after Comcast Corp. made an unsolicited $40 billion stock-swap bid for AT&T's cable business, known as AT&T Broadband.
AT&T rejected that offer last week, saying it did not reflect the "full value" of the cable assets, the newspaper said.
But in rejecting the Comcast offer, AT&T effectively put the cable business up for sale, saying it would "explore financial and strategic alternatives" and delay plans for an AT&T Broadband tracking stock, the newspaper said.
The Wall Street Journal report said shortly after Comcast disclosed its bid, AOL and AT&T started talks.
AOL's Co-Chief Operating Officer, Richard Parsons, is representing the media giant, as he knows C. Michael Armstrong, AT&T's chairman and chief executive, the newspaper said.
The newspaper also said Gerald Levin, AOL's CEO, had also met with Armstrong at least once to discuss the matter, according to a person familiar with the situation.
Parsons could not be reached to comment, the newspaper said. AT&T and AOL declined to comment, the report said.
