The day after Terry Semel was replaced as Yahoo! CEO, I ran across this article at CNBC that briefly touched on the rumor that News Corp had approached the search company about a possible “swap” of assets. According to the CNBC report, News Corp was thinking of offering up MySpace to Yahoo! in exchange for a 25% stake in the company:
In fact, one idea that News Corp. has been studying, according to sources, would involve the sale of its MySpace division to Yahoo for a significant stake in the company.
Bankers believe MySpace could be worth as much as $10 billion in such a deal, meaning News Corp. might be able to have as much as a 25% stake in Yahoo. The deal, which again is in its early stages, would also involve Yahoo outsourcing its search to Google, which currently plays that role for MySpace. News Corp. officials declined comment and its unclear whether News Corp has yet to broach the idea with Yahoo.
I didn’t really think much of it because 1) I hadn’t heard that rumor anywhere else and 2) it wasn’t clear if Yahoo! was even aware of such an offer. But based on growing discussions this morning, there may be more to this than I originally thought.
The buzz this morning revolves around an article in The Times of London called “News Corp explores swap of MySpace site for Yahoo! stake“:
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.
While the story is far from a confirmation, the fact that The Times of London is a News Corp company does lend some credence to the story. But, again, no good, solid word on whether or not Yahoo! was actually involved in discussions with News Corp:
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.
This might not be a bad deal for either party. Yahoo! could benefit in three ways:
- Ownership of another major Internet property
- Access to the leadership of a successful, competitive company
- Cross-pollination of News Corp’s media-centric customers with Yahoo!’s own media-centric customers, further solidifying Yahoo!’s position as an Internet media company
News Corp would get a couple of things out of the deal as well:
- They could rid of MySpace (which I’m sure they always intended to do) and hand it over to a company with MUCH more experience in managing online communities
- Access to Yahoo! properties for the publicizing and display of News Corp media content
- An outlet for Internet endeavors that wouldn’t require News Corp to create anything of their own
Under the old leadership I’d venture a guess that Yahoo! would quickly dismiss such a deal. But it remains to be seen whether the Yang/Decker duo will do things differently. If so, this could signal a pretty substantial shift in the online power game.
What do you think? Is this a good idea for Yahoo! and/or News Corp?
