Murdoch explores swap of MySpace site for Yahoo! stake

News Corporation has discussed swapping MySpace, its internet social networking unit, with Yahoo! in return for a 30 per cent stake in the enlarged group.

The discussions remain tentative and could collapse after the departure of Terry Semel as Yahoo!’s chief executive and his replacement by Jerry Yang this week. Mr Yang, co-founder of Yahoo! and incoming chief executive, yesterday pledged to “dig in” to his new role, and acknowledged the difficult task he faces to arrest the decline in the internet portal’s shares.

News Corp, the parent company of The Times, is interested in a deal even if it means losing some control of MySpace because it would give the media group exposure to a far larger internet-based business.

Other News Corp digital assets, including the games network IGN, bought in 2005 for $650 million (£326 million), are also thought to have been offered to Yahoo!.

A deal would demonstrate a remarkably swift return on News Corp’s investment in MySpace, which it acquired for $580 million in summer 2005.

Yesterday Yahoo! was worth $37 billion. A quarter stake in an enlarged company would be worth $12.3 billion. It is not clear whether Yahoo! was willing to accept the terms offered, even though it has been eager to break into social networking to catch up with Google. Yahoo! tried and failed to buy Facebook, the No 2 social networking site, for $1 billion last year.

http://business.timesonline.co.uk/tol/business/industry_sectors/media/article1957867.ece