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Yahoo Plays the Field with News Corp.

The two companies are mulling a deal that would involve mixing their Internet properties, and could spur a new offer from Microsoft
News Corp. Chairman Rupert Murdoch.
News Corp. Chairman Rupert Murdoch. Hector Mata/AFP/Getty Images

News Corp. may be trying to cut in on the mating dance between Microsoft and Yahoo!, but it may only succeed in tightening the software maker's embrace.

Yahoo (YHOO) and News Corp. (NWS) are discussing a deal that would involve mixing Yahoo's businesses with News Corp. Internet properties, including the popular social network MySpace, according to newspapers and blogs including Silicon Alley Insider. As part of the complicated deal, News Corp. and a private equity firm would buy a significant piece of Yahoo, as much as 20%, allowing Yahoo to remain independent. Google (GOOG) may also play a role, according to some accounts, possibly handling Web search and related advertising for Yahoo. It's unclear how much the deal would value Yahoo, though it's certainly above the $42 billion that Microsoft's cash-and-stock offer is now worth.