After secret talks between Microsoft and Yahoo broke down earlier this week, Reuters is reporting that both sides have reached out to other media giants looking for potential deals.

Time Warner, which has long been trying to rid itself of AOL, has emerged as the No. 1 second choice for both Microsoft and Yahoo.

Microsoft is believed to be talking to Time Warner about AOL as well as to News Corp. about MySpace. Meanwhile, Yahoo, which has been in discussions with Time Warner for the last nine months, is said to be ramping up its efforts to strike a bargain for AOL.

While the game of musical companies is likely to continue as companies struggle to assemble a viable competitor to Google, one new wrinkle could upset the works. Yesterday, the Justice Department announced that it has launched a formal investigation into Yahoo's controversial search deal with Google. That investigation is likely to draw in the wider interactive community, with Justice lawyers looking to make sense of the often incestuous world of online advertising.