Troubled search firm continues investigating alternatives to Microsoft's hostile offer.
Yahoo and media conglomerate Time Warner have stepped up talks to create an alternative to Microsoft's offer to take over the Web company, the Wall Street Journal reported on Wednesday citing people familiar with the matter.
The paper reported that the talks center on a deal that would fold Time Warner's AOL Internet unit into Yahoo, according to the people, who still consider a Yahoo purchase by Microsoft as the most likely outcome.
Last month Microsoft made a $41 billion offer to buy Yahoo, which was rejected as undervaluing the business.
Yahoo and Time Warner were not immediately available for comment.