Microsoft Corp. is considering acquiring a stake in Time Warner Inc.'s America Online Inc. unit, one of a number of possible Internet joint ventures the two companies are discussing, people familiar with the talks said.

While no transaction is imminent, a broad range of options is under review, said sources who spoke on condition of anonymity because the talks are confidential. Those options include combining Microsoft's MSN online service with Dulles-based AOL, establishing a combined advertising sales force and enabling users of their separate instant messaging services to communicate with each other.

The talks, reported yesterday by the New York Post, are part of a broader set of discussions between Microsoft and Time Warner that began following an antitrust settlement between the companies two years ago. As part of that, the corporate giants have been working together closely on the development of digital rights technology that would enable computer users to download motion pictures for a fee.

The prospect of Microsoft acquiring a stake in AOL grew out of a Microsoft proposal earlier this year to make its MSN search engine the main search provider on AOL, replacing Google Inc. "Microsoft is looking to put more eyeballs in front of its search engine," said David Card, an analyst with Jupiter Research.

But AOL turned the offer down. Such a move would have given Microsoft the kind of clout it has been seeking in its fierce battle with fast-growing search engine leader Google, which earned more money from its partnership with AOL last year than from any other relationship.

After AOL rejected the MSN search proposal, the parties began examining other ways to combine forces online that would lead investors to assign greater value to their Internet operations.

"It is no big secret that Microsoft and Time Warner have gotten closer over the last couple of years," said Scott Kessler, an analyst with Standard & Poor's Corp. "The fact that there are these talks is not a surprise. The question ultimately would be how this would be structured, what the price would be and those types of things. A lot of folks observing this are taking a wait-and-see attitude."

Google, which Wednesday raised more than $4 billion by selling fresh stock to the public, also reaffirmed its close ties to America Online. Google provides search and ads for AOL in the United States and Europe.

"Google and AOL have a healthy global partnership, and AOL remains a valued partner," Google spokesman Michael Mayzel said yesterday.

Officials from Microsoft and Time Warner declined to comment publicly on the prospects for a deal.

In its discussions with Microsoft, Time Warner has made it clear that it wants to continue to own a substantial chunk of AOL, sources said. America Online gives the New York-based media giant an Internet presence. AOL has roughly 20 million subscribers -- and generates a mountain of cash annually. Through the main AOL Internet service and other properties including Moviefone and MapQuest, the entire AOL network has a monthly audience of about 112 million computer users, according to ComScore Media Metrix.

One possible outcome would be for Time Warner and Microsoft to each own stakes in a combined AOL-MSN operation. In that event, sources said, Microsoft probably would also pay Time Warner cash, since AOL has a more robust business than MSN. Both sides are continuing to analyze exactly what businesses they might be willing to put into a combined operation and what each would seek from the other party.

The high-level discussions about a possible transaction have involved senior officials from Time Warner and Microsoft, as well as top executives of their respective AOL and MSN units. They are occurring against the backdrop of shareholder activist Carl C. Icahn pressing Time Warner to spin off its cable television division and take other steps to boost its flat stock price. But sources said the discussions predate Icahn's recent arrival on the scene and are part of Time Warner's continuing efforts to translate its far-flung media holdings, including Warner Bros. Entertainment Inc., People magazine and Home Box Office Inc., into a higher stock price.

Another possibility that has been discussed is putting AOL and MSN into a newly created entity that would sell stock to the public, with Time Warner and Microsoft continuing to be its major shareholders. This move would be aimed in part at ramping up the size of AOL and MSN to compete better with their larger rival, Yahoo Inc., and its 119 million unique users.

One source familiar with the talks said he considered a transaction combining AOL and MSN as complicated and a long shot. But he said that if the parties can figure out how to create more value by joining forces, a deal of some kind remains possible.

The main driver behind the discussions appears to be that AOL and MSN want to participate more fully in the growth in online advertising. "Google and Yahoo are growing faster in ad revenue than the other two," Jupiter's Card added.

The main search provider on America Online is Google.