YAHOO and AOL are reportedly close to reaching a merger agreement that would include a search ad deal with Google. Yahoo and Google are already planning a two-week test of such an arrangement, during which Google will serve 3% of Yahoo's search ads. However, MICROSOFT is trying to sweeten its courtship by bringing NEWS CORP to the table seeking a combined MySpace, MSN and Yahoo. The plot thickens.VERIZON is suing TIME WARNER CABLE for allegedly using false and misleading statements about FiOS TV to discourage consumers from defecting to the IPTV service. The suit focuses on commercials that infer FiOS TV requires a satellite dish and that TWC has been using fiber optics for longer than Verizon.BLOCKBUSTER is developing a set-top box that will deliver movies directly to TV sets. The box is believed to be a stand-alone unit that utilizes recently-acquired Movielink. An announcement is expect soon.MYSPACE TV has signed a TV, DVD and merchandise deal for its content that covers...