Bidders line up for AOL's book division

Rupert Murdoch's News Corporation and German media giant Bertelsmann have emerged as potential bidders for AOL Time Warner's book publishing division.

AOL Time Warner wants to sell the division, which houses authors such as Margaret Atwood, Iain Banks and Edwina Currie, as part of a plan to reduce its £16bn debt mountain.

The division, which includes Little, Brown & Company and Warner Books, is one of the largest publishers of mass-market paperbacks in the US.

But the beleaguered media giant is believed to have elicited interest from Random House, a unit of German media group Bertelsmann, and HarperCollins, part of News Corp.

All discussions have been preliminary and no terms have been discussed, according to a report in the New York Times.

Merrill Lynch, which is handling the sale, last week sent several publishing companies and investment funds financial information about the division and expects a first round of bids to be forthcoming in a few weeks, said the report.

AOL executives have said the company hopes to raise about £250m from a sale.

According to sources close to the companies, the media giant has also been holding informal talks with music company EMI about its music division.