News Corporation is again wading into the tense takeover negotiations between Microsoft and Yahoo, this time discussing how it could back up the technology giant's bid for the web company.
A deal could create a powerful internet alliance between the News Corp-owned MySpace site, Microsoft's MSN brand and, if the takeover of Yahoo succeeds, its online network.
The New York Times, which today reported that negotiations were at a "sensitive stage" between News Corp and Microsoft, said that with Rupert Murdoch's backing the technology company could increase its offer for Yahoo.
"There's a long way to go before anything is definite," one source told the paper.
Another source said the terms were still being worked out, but that MySpace's parent company, Fox Interactive Media, would be put into the mix as part of the alliance between the two companies' internet assets.
The source also suggested that News Corp would put cash into the Microsoft bid for Yahoo.
When Microsoft made the unsolicited cash and stock offer for Yahoo on January 31, the deal was valued at $44.6bn. But a subsequent drop in Microsoft's share price has pushed the value down to $42bn.
Yahoo has rejected the offer, claiming it undervalues the company, but has also been pursuing various alternatives to revive its finances - including discussions with News Corp about a similar merger of internet assets.
Rupert Murdoch, the News Corp chairman and chief executive, reportedly met Yahoo chief executive Jerry Yang shortly after Microsoft made its offer earlier this year.
This revives the possibility of News Corp swapping MySpace for a stake in Yahoo and discussing an advertising partnership that would see the two partnering with Google.
The latest twist in the battle for Yahoo comes as the internet company announced a two-week experiment to bring Google's powerful AdSense service on to its search site in the US.
This test will be limited to showing Google ads against 3% of Yahoo's search queries. But it is a move designed to frustrate Microsoft, which responded by saying a definitive deal would "consolidate 90% of the search advertising market in Google's hands" and "make the market far less competitive".
Earlier rumours of discussions between Yahoo and Time Warner's AOL division have also been revived, with the Wall Street Journal reporting yesterday that the two sides are nearing an agreement over combining the two web companies.
Such a deal would reportedly see Time Warner paying Yahoo in cash for a 20% stake in the newly merged internet firm.
By: Jemima Kiss
guardian.co.uk; April 10, 2008
