Dec. 17 (Bloomberg) -- Speculation that Jonathan Miller, former chief of Time Warner Inc.’s AOL, would buy Yahoo! Inc. pushed Yahoo’s shares up as much as 16 percent two weeks ago, as some analysts called him a candidate to replace CEO Jerry Yang.

Yet Miller isn’t trying to buy Yahoo and isn’t a candidate for the firm’s top job, people familiar with the matter said. Rather, as a partner at a venture firm he founded called Velocity Interactive Group, he’s scoping out new media investments at a time when spending in that space is dropping.

“It’s a difficult environment for any business transaction right now,” Miller, 52, said in an interview. “The environment right now is clearly unsettled.”

Miller wouldn’t comment on his reported involvement with Yahoo. Through investments in Web video and online advertising, Miller said he wants to own companies that cater to people who watch television and read the news online.

Venture firms invested only $102 million in first-round financings for media companies in the third quarter, down 45 percent in a year to the lowest levels since 2005, according to a PricewaterhouseCoopers MoneyTree Report.

In July, Miller made headlines when Carl Icahn named him as a potential director for Yahoo when the billionaire investor was seeking to oust the board. Analysts including Laura Martin of Soleil Securities have mentioned Miller as a potential successor to Yang, though a non-compete clause Miller signed bars him from joining any AOL rival until March.

Cocktail Napkin

In November 2006, the month Time Warner fired him from AOL, Miller started working with Ross Levinsohn, who had left News Corp. as the head of its Internet group. Over cocktails at the Four Seasons in Los Angeles, the pair sketched out ideas on the back of a napkin in seven minutes, Levinsohn recalls.

A year ago, they merged an existing fund they owned with ComVentures, which had raised $300 million in capital and had more than $1.5 billion in assets. The $300 million had been raised based on the promise of early stage and growth investments, Levinsohn said. He and Miller are still looking at investments with what’s left in the fund, Levinsohn said.

“Only people with the most stellar track records can raise money in this market environment,” said Brooks Zug, co-founder of HarbourVest Partners LLC in Boston, which manages more than $30 billion in venture capital and buyout investments. “Many investors prefer to commit where the odds of success are higher because there’s a proven track record.” Zug said he and his partners haven’t spoken to Miller.

Icahn Opposition

Yahoo shares rose after the Wall Street Journal said Dec. 2 that Miller might pursue a takeover of the company. Ashley Huston, a Journal spokeswoman, said the paper stands by the story.

On Dec. 3, Icahn told CNBC that he would oppose a potential bid for Yahoo by Miller. Icahn didn’t return calls seeking comment.

Yahoo may not announce its successor to Yang until January or later, a person familiar with the matter said Dec. 9. Yahoo shares, down 44 percent this year, fell 25 cents to $13.11 at 4 p.m. New York time in Nasdaq Stock Market trading.

Miller and Levinsohn say they’ve been spending their time on the dozen companies they’ve invested in together.

‘Be a Player’

“He wants to be a player, roll companies up, buy divisions of public companies,” said Ted Leonsis, former AOL vice chairman and owner of the Washington Capitals hockey team, who has kept in touch with Miller since they both left the Web unit two years ago. “Jon would be astute at finding and handling them.”

Miller is working on projects such as Next New Networks, which makes Internet television shows in what Miller likens to “the Viacom of the Web.” There’s also FatTail, which helps companies manage their advertising inventory. Miller, who picked up Chinese martial arts 30 years ago to rebuild his strength after getting mononucleosis, also does two hours of tai-chi on weekdays and eight hours on weekends.

“Miller does not have credentials as a big company CEO nor does he have credentials as a turnaround guy since he was fired from AOL by Time Warner,” Soleil’s Martin said.

AOL replaced Miller in 2006 with NBC executive Randy Falco. To counter fleeing dial-up Internet users, Miller had tried to refocus AOL on advertising, introducing services such as music. He led the 2004 purchase of Advertising.com, an online ad network that forms the centerpiece of AOL’s current advertising strategy, for $435 million.

“If you believe in things going forward - these large trends I’ve been talking about - there’s not a better time to be invested in some of these things,” Miller said.

To contact the reporters on this story: Gillian Wee in New York at gwee3@bloomberg.net; Tim Mullaney in New York at Tmullaney1@bloomberg.net.

Last Updated: December 17, 2008 16:29 EST