News Corporation is reportedly considering a deal with Yahoo! that would see the group transferring its social network MySpace to Yahoo! in return for a 25% stake in the combined company.

The Times is reporting that negotiations between the two companies are tentative, and may be under threat after Terry Semel's replacement by Jerry Yang as Yahoo CEO.

The deal would apparently value MySpace at $12bn, based on the current $37bn valuation of Yahoo!. This would represent a more than good return on the $580m News Corp paid for the site. Last November, Rupert Murdoch told investors that he could sell MySpace for $6bn.

Yahoo! has been eager to join the social networking party, and was rumoured to be looking at Facebook for $1bn last year. This deal would give them that opportunity.

With Facebook gaining ground on MySpace, the deal may well suit News Corp, as it would give them more online exposure, while still retaining an interest in MySpace.

Graham Charlton

Published 20 June, 2007 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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