Is AOL planning to come home to CBS?

Rumours that America Online will acquire the US broadcast network CBS continue to fly. Sources say it's inevitable, with CBS being outpaced by NBC and ABC in the cable and online arenas. But how? It's unlikely the leaders of the $US28 billion CBS would accept AOL stock as the price of purchase.

It's hard to discern the seriousness of the rumor reported by San Jose Mercury News columnist Chris Nolan that AOL will buy CBS. She hedges with the classic line: "some say yes, some say no." But her sources close to the talks think it's inevitable, with CBS being outpaced by NBC and ABC in the cable and online arenas.

Everyone's been speculating on the fate of CBS and rumors surrounding AOL have surfaced before, but Nolan clearly wants in on the fun. "Just the idea that the Tiffany network - once home to broadcast journalism's patron saint Edward R. Murrow - could become part of the service that hosted Matt Drudge says volumes about the triumph of new, interactive media," she writes with glee. Of course, AOL could afford to print up more Net stock to buy the $28 billion company, and move into TV and radio broadcasting. But Nolan says CBS honcho Mel Karmazin probably wouldn't accept stock.

It's a nice dream sequence, but one source says CBS and AOL will more likely end up with a wide-ranging alliance, like the one making CBS the official news provider for AOL sites. And Nolan never addresses CBS' Net holdings like MarketWatch or Sportsline, or the huge effect the deal would have on AOL as a pure Net play.

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