According to reports, News Corp. may decide to merge its Fox Interactive Media unit which houses MySpace and IGN with Yahoo and take a stake of 20-25 per cent in the combined entity.

The talks are believed to be at a very preliminary stage.

Apparently, besides talking with News Corp., Yahoo also has explored an advertising partnership with Google, its biggest rival. Reports of a possible merger with Time Warner Inc.‘s AOL were published in the media recently.

Microsoft‘s deal was originally at $44.6 billion, or $31 per share, while Yahoo is believed to want at least $40 per share, or about $56 billion.