News Corp. is talking to several companies, including Yahoo Inc. and Microsoft Corp., about a minority investment stake in its satellite operations, according to a source close to the discussions.
The media company, which recently said it plans to consolidate its worldwide satellite operations into "one umbrella entity," would give the prospective investor a piece of the new satellite company in exchange for stock or cash, the source said.
News Corp. is looking to combine Star TV, Foxtel in Australia, its 40 percent stake in British Sky Broadcasting Group PLC and its 35 percent stake in Sky Latin America, the source said. This combination would provide consumers with a digital satellite platform to view a variety of video and Internet services on TV.
The source dismissed recent reports about a broad alliance between News Corp. and Yahoo as "an exaggeration of an exaggeration of speculation."
Alliance would be beneficial
Analysts said a strategic alliance between News Corp. and Yahoo or Microsoft could be beneficial to both.
News Corp. has content (publications and TV programming) while Yahoo has "a great understanding of how to display it on the Web," said Lise Buyer, an Internet and new media analyst with Credit Suisse First Boston in California.
"Yahoo, until this point, has looked to remain its own island, but in the wake of the AOL Time Warner merger seems to be reconsidering that [position]," added Anya Sacharow, an Internet analyst with Jupiter Communications in New York.
Officials from News Corp., Yahoo and Microsoft all declined to comment.
