According to a report in News Corp-owned newspaper The Times, talks are at a tentative stage. News Corp has proposed that Yahoo! allows it to buy a 25% stake in the business in exchange for MySpace and a host of other digital assets, including games network IGN.
It is also unclear whether the talks will continue, following the resignation of Terry Semel, chief executive of Yahoo, yesterday. His role has been taken by cofounder Jerry Yang.
A 25% stake in Yahoo!, once enlarged by the addition of MySpace, would be worth $12.3bn. This is nearly a 24-fold increase on the $580m sum NewsCorp paid for MySpace and associated businesses in 2005. Yahoo is currently worth $37bn (£18.6bn).
Analysts have said that the deal, if it went ahead, would represent a significant step up for both businesses, with News Corp willing to trade the profitability of MySpace for greater exposure through Yahoo!'s global internet news offering.
According to The Times report, it is unclear whether Yahoo! was willing to consider the terms of the deal, but it is not a secret that the company has been very keen to acquire a major global social networking website after failing to buy Facebook for $1bn (£503m) last year.
Semel, who will stay on in a non-executive role, has experienced a 30% drop in Yahoo!'s stock price over the last 18 months. The company has also missed out on acquisition opportunities, such as the Facebook site and advertising services company DoubleClick, which was bought by archrival Google.
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