According to a report by The Times newspaper, Rupert Murdoch's News Corp. is currently in preliminary talks to swap its social networking Web site MySpace for a 25% stake in Yahoo Inc. Talks reportedly began before chief executive Terry Semel resigned Monday and at this point is uncertain whether the talks will move forward with Yahoo!'s new CEO, Jerry Yang.
Murdoch acquired MySpace in 2005 for $580 million, and he is now looking for exposure in a much larger Internet-based business such as Yahoo!, which averaged 458 million unique visitors in February. Yahoo! was valued around $37 billion based on Tuesday closing prices. Still, profit fell 11 percent in Q1 2007 and the company warned that second-quarter results may be at the low end of expectations, a trend that has been haunting Yahoo! for some time now, while rival Google has increased six-fold in value since 2004.
The deal could represent a smart move for Murdoch, who is seeing his MySpace internet site lose users to rival Facebook. The much larger audience could give News Corp. a chance to market its television, film and news content, while in return, Yahoo! would also benefit from News Corp's popular TV shows, such as Lost and 24, to boost its content strategy and attract advertising.