News Corp proposes MySpace exchange for 30% of Yahoo stake

Posted by Mica Swyers on June 21, 2007 at 10:47 AM

Discussions are underway for a possible merger between News Corporation and Yahoo wherein News Corp would turn responsibility of MySpace, its social networking site, over to the Internet portal, asking 30% of the stake in return.

News Corp recently acquired MySpace in 2005 for $580 million. Though it would lose control of the social networking hub, it could reap significant revenue from the increased exposure that would result from the merger. The deal with Yahoo, which was worth $37 billion on June 20, would place a value of approximately $12 billion on MySpace.

Yahoo, which unsuccessfully tried to buy rival networking site Facebook last year, for $1 billion, could also benefit from the exposure brought in by the enlarged group. It remains to be seen, however, if the deal will collapse when Jerry Yang replaces Terry Semel as Yahoo’s chief executive at then end of June. In addition, there is speculation that News Corp’s proposal foretells MySpace’s decline in the near future.

Source: The Times and Tech Crunch through I Want Media