Yahoo May Buy MySpace For 25% Stock Swap

News Corp explores swap of MySpace site for Yahoo! stake from the Times Of London reports that News Corp is interested in handing over MySpace to Yahoo in exchange for 25% of Yahoo’s stock.

Such a deal would value MySpace, the very popular social networking and video site, at about $12 billion. But at the same time, such a deal would help Yahoo compete against Google’s YouTube. In addition, currently Google reached an ad deal with MySpace back in August 2006, but as the Wall Street Journal noted back in February, the deal is not yet finalized and has hit several “snags.” This might leave room for Yahoo to control search and ad placements on the huge social property.

After Shake-Up, What Now for Yahoo? from the New York Times covers Yahoo as Google’s main competitor and that search, both paid and organic, is one of Yahoo’s largest assets. For Yahoo to get out of the search space would be a big mistake. This deal may help Yahoo do just the opposite and control a large space of the market.

Michael Arrington believes this deal would be a mistake for Yahoo but a great move for News Corp.

Much more coverage over at Techmeme.