AOL: No comment on Time Warner merger

AOL Time Warner declined to comment on a report that it was close to agreeing terms of a merger between Warner Music and Germany's BMG.

If agreed the deal would create the world's second biggest music company.

Both companies have been in talks for the last two months, according to recent newspaper reports.

If effective, this would be seen as a way for both companies to combat rise in piracy and cheap internet downloads as well as declining sales in developing countries.

A tie-up would cut the number of global music giants from five to four and increase pressure on EMI, which has so far failed to find a partner.