Speculation is growing that Yahoo! is close to a $1bn deal for social networking site Facebook.

The Wall Street Journal reports that Facebook is in "serious discussions" to sell itself to the search engine and portal, following months of reported takeover bids from big media players.

According to the paper, Microsoft and Viacom have also held discussions with the site in the last year, while BusinessWeek reported in March that the company had turned down a $750m offer and hoped to raise $2bn through a sale.

Facebook, which says it has over 9m members, recently signed a big advertising agreement with Microsoft, reportedly guaranteeing it $200m in revenues over the next three years.

So it will be interesting to see how expensive a deal for the site is, especially as big media firms are also circling other social media outfits such as YouTube and Bebo.

If it’s over $1bn, that would underline what a good deal Rupert Murdoch got when he paid less than $600m for the much more popular Myspace a few months ago, particularly in light of its three-year, $900m ad agreement with Google last month.

But leaving the price aside, this would also seem a smart deal for Yahoo!; both for traffic generation and to further its online community and social search strategy. That has seen it launch its Answers social search tool this year, as well as its recent purchase of bookmarking site del.icio.us.


Published 22 September, 2006 by Richard Maven

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