News Corporation may be selling MySpace to Yahoo! for a 30% stake in the floundering company, according to the Times Online. However, it’s hard to imagine any corporation who would want stake in Yahoo!.

The Times Online has reported that News Corporation has, at this point, only discussed swapping MySpace for a stake in Yahoo!; the discussions, however, remain preliminary and could collapse after Terry Semel, Yahoo’s CEO leaves this week.

But why Yahoo? Why not take a 5% stake in Google than a 30% in Yahoo? I believe News Corp specifically choose Yahoo because of it’s user base – that specific crowd who chats in message boards, IM’s, video chat, and forums. MySpace could benefit from Yahoo’s users, while Yahoo, as a company, could surely benefit from MySpace.

“A deal would demonstrate a remarkably swift return on News Corp’s investment in MySpace, which it acquired for $580 million in summer 2005. Yesterday Yahoo! was worth $37 billion. A quarter stake in an enlarged company would be worth $11.1 billion,” wrote Dan Sabbagh, Media Editor at News Corp’s Times Online.

In addition, other News Corp sites such as the Internet Gaming Network (IGN) are rumored to be included in the deal.

Last year, Yahoo! tried to buy the #2 social networking site, Facebook, with no success. And now the potential to own the #1 social networking site, MySpace, is staring Yahoo in the face; however, it’s to anyone’s guess what will ultimately happen.

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Entry was posted on Wednesday, June 20th, 2007 at 12:18 pm under Uncategorized.

Read more entries by George Gardner.
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