NEW YORK (CNN/Money) - Despite negotiations to merge with BMG, AOL Time Warner is eyeing a sale of a majority stake in Warner Music to EMI, according to a published report Monday.

EMI made a $3.5 billion offer for Warner Music's recorded music business earlier this year, but was rejected. And there is speculation that EMI's sale of $243 million in convertible bonds was made to secure financing for another run at Warner, the New York Post reported.

AOL Time Warner chairman and CEO Dick Parsons is looking to trim the company's exposure to the struggling recorded music business, but by holding a minority stake in a combined company, AOL Time Warner could see some upside should the industry recover, according to the Post.

Parson worked with EMI's chairman Eric Nicoli on a failed merger between Warner and EMl in 2000, but that deal was struck down by regulators.

Meanwhile, negotiations between Warner and BMG have slowed down recently as the two sides have looked at valuations, which is complicated because the two companies use different accounting methods, the paper reported.

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