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Steve Ballmer

Yahoo looks to Time Warner

SAN FRANCISCO -- Running out of time and options, Yahoo Inc. again rebuffed Microsoft Corp.'s buyout offer yesterday and continued to seek refuge in the arms of Time Warner Inc.

Yahoo, which faces a takeover fight if it does not reach a deal with Microsoft by April 26, is trying to sell a substantial minority stake to Time Warner, according to people familiar with the talks.

The deal being discussed would combine Yahoo with Time Warner's beleaguered AOL Internet unit. Time Warner's stake, if committed to support Yahoo's management against Microsoft, would make it harder for the software giant to win a threatened proxy fight.

Yahoo and Time Warner declined to comment on...