A report out this afternoon in The Wall Street Journal pumps life back into the rumor that Yahoo and News Corp are negotiating a deal that would trade MySpace and other Fox Interactive properties for a significant stake in Yahoo. According to the Journal, the negotiations hinge on valuations; News Corp wants MySpace to be valued between $6 and $10 billion, while Yahoo needs to come in with a valuation that beats Microsoft's $44.6 billion offer to stand any chance. Adding up the numbers between MySpace and other News Corp properties such as IGN, plus a likely infusion of cash, the WSJ says the stake in Yahoo could be more than 20 percent.{anchors} The rumor of a News Corp-Yahoo alliance is nothing new " there was significant chatter about the possibilities as recently as last summer. But with Yahoo seemingly desperate to avoid falling into Microsoft's hands, it's not surprising they are resuming talks. Once again, I'm left not seeing a way that any sort of News Corp alliance is going to maximize value for shareholders of either company, especially with Yahoo and News Corp both going into the talks with valuations numbers grounded in nothing other than self-interest. Similar to Microsoft making a relatively small investment in Facebook that valued the company at $15 billion " just because Yahoo and News Corp say the deal makes Yahoo worth $50 billion and MySpace worth $10 billion doesn't mean the public markets will see it that way (which, is all that really matters).
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