The station, which analysts say is bleeding cash, is valued at about US$70 million. AOL owns 85 per cent of the station.
A spokesperson for Tom.com said the company was in negotiations with CETV, but added that the deal would only go through if "all terms are found to be satisfactory for Tom".
ACNielsen figures show that the station has only a two per cent share of the local market. Its programming is largely entertainment-driven, produced in Hong Kong or the mainland.
Carat general manager for Eastern China, Weifoon Lai, said: "It tends to be very low budget and they have made no investment in programming. It has to compete with channels like Phoenix, which is number one in China, and local stations. There are 30 of these offering exactly the same programming as CETV. It really needs to find and identify its target audience, scheduling and programme structure to have an edge in the market."
However, Derek Kwok, vice-president of ZenithOptimedia, said ceding control of the station to a local player like Tom.com, with strong connections in China, could help drive CETV's penetration of the China market in both distribution and market share.
"CETV has not been very successful in recent years and ratings for the channel are not good at the moment. But, it does have the potential for better distribution. It's at a disadvantage because its programming is not unique and its strategy has not been clear," said Kwok.
"If CETV is run by local Chinese it will have more insight. There is also the issue of sensitivity when it comes to content for foreign channels. If managed by Tom, it will be easier for CETV to smoothen out this and distribution matters."
CETV has permission to legally broadcast in Guangdong, as well as in mid- to upscale hotels and compounds for foreigners in the country.
For former internet play Tom.com, the acquisition will be the first broadcast operation in its expanding media portfolio. In the last two-and-a-half years, the company has been on a spending spree, buying print and outdoor companies to evolve beyond its internet origins. It has acquired more than 30 companies, including outdoor companies in China and publishing firms in Taiwan.
AOL Time Warner declined to comment on the sale, but a spokeswoman noted: "It has always been our strategy to seek strategic partners for CETV. And we have been engaged in discussions with various potential partners, including Tom. com. While talks have been progressing, no final agreement has yet been reached."
Tom.com's evolution
2000: Internet portal Tom.com's initial public offering creates near
hysteria in HK.
2001: Tom.com goes on a buying frenzy as it acquires publishing, sports
and outdoor firms to become more than just a dotcom.
2002: Tom.com, which already has 20 companies under its belt, buys
another 13 before the end of the year, including entertainment, outdoor,
publishing and online businesses.
Total investment: HK$3,466.2 million