Why not?

OK, everyone knows there’s history here. AOL’s last merger with a big television, movie and news-media company was a disaster. So was News Corp.’s last big purchase of a web company offering an active community. But Time Warner and MySpace then (or now) couldn’t do for AOL and News Corp. what AOL and News Corp. could do for each other today.

Let’s start with the fundamentals. As Kara Swisher writes at AllThingsD (owned, through subsidiaries, by News Corp), AOL’s stock price has dropped to the point where the company is ripe for a takeover.

“It’s almost free, given its cash on hand,” says one large investor: $458.7 million, against a market cap of just $1.09 billion. AOL’s stock is just $10.22 a share, following lower-than-estimated revenues in the second quarter.

News Corp, on the other hand, just issued a quarterly statement containing what Rupert Murdoch called “the most robust balance sheet in our history.” It’s quite a turn around from just a month ago, when the company’s future appeared to be in doubt.

In fact, today, News Corp. has $12.7 billion in cash on hand: enough to complete a planned $5 billion stock buyback, buy AOL in cash, and have $6 billion left over — more, if you count AOL’s hoard.

Film, television, publishing: every division at News Corp. is growing. The only blemish? Online media: where MySpace bled money but where AOL is a juggernaut.

The web is the future of media delivery. Rupert Murdoch knows this. This is why he appointed John McKinley, an AOL veteran, to be News Corp’s chief technology officer and President of Technology for its digital media group in February. With MySpace, Murdoch just made the wrong bet.

AOL and Huffington Post have found all new ways to monetize the work of millions of contributors, striking a better balance between original reporting, online celebrities and aggregate crowdsourcing.

Fundamentally, News Corp’s room for future growth in other parts of the media industry is limited. Its reputation in the newspaper industry has suffered greatly from the company’s recent scandals, which also scuttled a planned purchase of British satellite broadcasting company BSkyB.

Actually, the two companies are very much alike. News Corp’s origins in satellite TV parallel AOL’s in dial-up subscriptions. Both began with innovative delivery and expanded into content and new kinds of media. If anyone knows how to guide AOL all the way through that transition, it’s Murdoch.

What would a combined AOL and News Corp. look like? First, I think we have to stipulate that if the company were to adopt a combined name (which they wouldn’t, because News Corp. never has), it would be “AOL News.” (I think I like that even better than “NewsBeast.”)

AOL, frequently criticized for riding roughshod over its sites, would become more sympathetic juxtaposed with the ruthless News Corp. (Or possibly vice versa.) You don’t like the AOL Way? Let’s see how you feel about the Murdoch Way.

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