BUSINESS
03/28/2008 02:45 am ET | Updated May 25, 2011

Why A Yahoo-News Corp. Deal Makes Sense

News Corp. is reportedly talking to Yahoo about an arrangement that would look a lot like a joint venture. It's unclear how these talks will play out, but the structure of the deal is far superior to Microsoft's proposed integration go-round.

The Wall Street Journal, AP and others have all followed blog reports from TechCrunch and Silicon Alley Insider noting that News Corp. is talking to Yahoo about a deal (see Techmeme). This deal would leave Rupert Murdoch with a 20 percent of Yahoo. News Corp. would toss in the Fox Interactive properties-MySpace, AmericanIdol.com and others-and some cash with a private equity player to get a beefed up Yahoo.

The more I think about this arrangement the better it sounds. Here's why:

Yahoo would have clarity of mission. If this News Corp. deal were consummated Yahoo would become what it's supposed to be-a media company. Yahoo is a sort-of-technology company, but it's no Google. Microsoft would give Yahoo technology, but not the type it wants. Almost instantly you'd have a Windows (Microsoft) vs. open source (Yahoo) on the backend technical infrastructure. Who needs those religious wars? Yahoo is about entertainment, splashing American Idol on Yahoo.com and being a mainstream network.

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