AOL's dial-up business: Is there a (minor) bidding war brewing?

AOL's dial-up business may be worth a little more than expected--especially if Liberty Media and EarthLink get into a bidding skirmish for Time Warner's most unloved asset.

Let's be clear: AOL's dial-up business is dying, but it still throws off cash and still has 8.1 million subscribers. For a company like EarthLink, AOL's dial-up business would make sense. But now Liberty Media may be throwing its hat in the ring.

According to the Financial Times, Liberty Media is interested in swapping its stake in Time Warner for AOL's Internet access business. Keep in mind that this Liberty talk appeared three months ago too--Liberty chief John Malone and CEO Greg Maffei are always swapping assets and the company's latest earnings conference call highlighted more than a few possibilities.

However, given Time Warner's recent move to officially split AOL into two halves a deal is likely around the corner. The FT indicated that Time Warner and Liberty aren't in any serious discussions.

What's unclear is whether this FT story is just a bluff. The AOL dial-up deal only works for EarthLink if the unit is acquired at a bargain basement price. If this Liberty chatter scares EarthLink away instead of landing a higher price Time Warner may have a difficult time unloading the dial-up business.