AOL, News Corp. jump into Microsoft/Yahoo deal

The Wall Street Journal is reporting that Yahoo is again talking with AOL about a possible merger between the two

companies. (This in addition to its announcement yesterday about an experimental deal between Yahoo and Google for Google AdSense in which Google ads would be shown against 3% of Yahoo search results.) In the meantime, News Corp. (which owns MySpace) has reportedly decided to back Microsoft, The New York Times reports.

Details of exactly what News Corp. would do if it were to align with Microsoft are sketchy at this time. But the talk is that an alliance would be created between MySpace, the MSN brand and the Yahoo network (should Microsoft have control over Yahoo). There is some suggestion that News Corp. might even pitch in some cash. When Microsoft first made its offer, the deal was valued at $44.6B, but because Microsoft's share price has since dropped, the deal is now valued at about $42B.

In the meantime, the WSJ says Yahoo and Time Warner's AOL are near an agreement to merge that would reportedly have Time Warner chipping in cash for a 20% stake in the new company.

The WSJ story says:

The AOL-Yahoo deal under consideration would include the repurchase of some Yahoo shares at a price above Microsoft's offer. Taken together with a possible search advertising pact with Google Inc., the plan could give Yahoo an alternative to a Microsoft takeover -- although many analysts and investors believe Microsoft will ultimately win out. At the least, Yahoo's efforts could give it more leverage to negotiate a higher price from Microsoft.

Will Yahoo fend off Microsoft? Vote your thoughts.

Go to the Microsoft Subnet home page for more news, blogs, podcasts. More Microsoft Subnet blog posts:Yahoo cozying up to Google; Microsoft cries "monopoly" Forefront "Stirling" beta released at RSAMicrosoft: Can we all work together to create trust? Microsoft told to pay Alcatel-Lucent $367 million Yahoo hostile takever looks to be a-comin'All Microsoft Subnet blog posts

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