News Corp and Yahoo! edge towards Net alliance

Rupert Murdoch's News Corporation has been holding alliance talks with Internet portal, Yahoo!, according to US reports.

The New Yorker magazine reported that Jerry Yang, CEO of Yahoo!, is considering a stock swap that would give his company a stake in News Corp's satellite division. The deal would also give Yahoo! access to News Corp's international content, which includes BSkyB, Fox Broadcasting, the Twentieth Century Fox film company, and newspapers including The Times and the Sun.

The alliance would be the latest tie-up between a traditional media giant and an online start-up, following January's $350bn merger of Time Warner and AOL.

Although the deal wouldn't give News Corp the fully-functional Internet company that Time Warner has with AOL, Rebecca Ulph, analyst at Fletcher, said Yahoo! is a good choice for Murdoch.

News Corp has had difficulty in translating its strong real-world brands into online currency, she said, while Yahoo! has channelled its energies into building one of the strongest online brands in the world. Ulph added that when the media company tried to form its own portal, it failed because Murdoch lacked an overarching brand that ties together all his interests.

"Murdoch has used the Internet as just another distribution centre for what he already produces; there's no added value," Ulph said. "If you go to the Fox TV site, all you get is Fox TV. People say: 'What's the point? I already have a television.'"

News Corp could not be reached for comment.