BUSINESS
04/17/2008 05:12 am ET Updated May 25, 2011

Microsoft Said To Be In Talks With News Corp Over Joint Yahoo Bid

The New York Times is reporting that News Corporation and Microsoft are in talks to make a joint bid for Yahoo:

Rupert Murdoch's News Corporation is in talks with Microsoft about joining in its contested bid for Yahoo, according to people involved in the discussions. The combination, which would join Yahoo, Microsoft's MSN and News Corporation's MySpace, would create a behemoth that would upend the Internet landscape.

The talks are a surprising twist in the two-month-long takeover story that began when Microsoft made a $44.6 billion bid for Yahoo.

Yahoo has resisted Microsoft's overtures, contending that it will not negotiate unless Microsoft raises its offer. Yahoo, which wants to remain independent, has been in a desperate search for white knights, holding conversations with Time Warner's AOL and News Corporation.

But Reuters is also reporting late Wednesday that Yahoo and Time Warner are closing in on a deal that would merge Yahoo with Time Warner's AOL division:

The source confirmed a Wall Street Journal story saying Yahoo would receive a cash investment from Time Warner in exchange for a 20 percent stake in the combined Yahoo-AOL business. The deal would exclude AOL's fading dial-up Internet access business and value AOL at about $10 billion.

A deal with Time Warner and AOL would be part of a multi-pronged strategy by Yahoo in which it would outsource Web search advertising operations to Google Inc, the source said.