The deal could be announced early next week, when Viacom is scheduled to report its earnings. Comedy Central, which airs shows like bawdy, animated South Park and the nightly satirical newscast The Daily Show with Jon Stewart, has thrived financially for the competing media titans.

While neither company has commented on the deal, it is likely to be the first asset sale by AOL Time Warner as executives try to revive growth at the world's largest media company and to restore investor credibility by cutting its approximate $29 billion in total debt, the report says.

As part of those efforts, the company had been exploring the sale of its stakes in Comedy Central and CourtTV, which it owns with Liberty Media Corp, its book publishing division, its three Atlanta sports teams and parts of its music business.

Comedy Central, which reaches 82 million US homes, was launched on April Fool's Day 1991 after Home Box Office, owned by AOL Time Warner, merged its Comedy Channel with MTV Networks' HA! comedy network, owned by Viacom. The network, one of the few examples of a successful media joint venture, has gained a reputation for continuing to push the limits of what can be broadcast on TV with sharp political satire and increasingly popular gross-out humour.

It has humorously covered political events and introduced original shows, such as "Mystery Science Theater 3000" and "Politically Incorrect," each of which garnered Emmy Award nominations and eventually landed on other networks.