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Yahoo finds renewed interest in once-rejected offer

When News Corp offered Yahoo a deal last summer - MySpace in exchange for a stake in Yahoo - Rupert Murdoch's company received the brushoff.

Yahoo wanted no part of News Corp's proposal shortly after Jerry Yang took over the CEO post. In June 2007, it looked like Yahoo could bolster its fortunes by adding the big social networking site to its properties in exchange for giving News Corp a piece of the action.

Yang and the board believed their ongoing strategy would kickstart Yahoo's fortunes again. They politely told the News Corp magnate to hit the bricks.

Now Yahoo wants to be Best Friends Forever with News Corp, which doesn't look nearly as scary as Microsoft and its unsolicited multi-billion dollar takeover bid. The Wall Street Journal said an exchange of MySpace and other News Corp properties for upwards of 20 percent of Yahoo was in discussion.

The terms sound similar to last June's offer; the IGN gaming network had been mentioned as part of the deal at that time. Eight months later, we get the impression it's News Corp being played for the possible limit break, as in a fatter deal from Microsoft.

Big Yahoo shareholder Legg Mason wants $40 per share out of Microsoft. In a shrewd bit of trading, Bloomberg said Legg Mason portfolio manager Bill Miller beefed up the company's stake in Yahoo in the fourth quarter, not long before Microsoft made its offer.

If Yang convinces Yahoo shareholders a News Corp deal makes more sense than whatever Microsoft puts on the table, he will also have to get them to believe they are trading off a decent payday now for a better one in the next few years. Patience to do so may be hard to find.