Now Yahoo!-News Corp.?

This asset swap/strategic investment scenario is somewhat more plausible than Yahoo!-AOL but still a long shot. According to Silicon Alley Insider:

We hear from two sources that News Corp (NWS) and Yahoo (YHOO) are still discussing a possible transaction, designed to create an alternative to a Microsoft (MSFT) takeover. (Or at least the appearance of one). News Corp. declined to comment, and we don’t have details. We do not believe News Corp is considering an outright acquisition of Yahoo. News Corp. has repeatedly said it’s not interested in buying Yahoo, and it’s hard to see how the company could afford to compete with Microsoft’s resources.

So what are NWS and YHOO discussing? Our guess: Some kind of swap where News Corp. gives Yahoo MySpace and other Fox Interactive Media properties, perhaps along with a slug of cash from itself or a private-equity firm, in exchange for a major equity stake.

There’s a palpable feeling of instability or impending chaos right now in the tech sector that extends beyond Microsoft-Yahoo!. But then again, maybe I just haven’t gotten enough sleep.

Here’s what I was doing tonight: Yahoo! Searchlight Awards.

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Here’s more on the News Corp talks from my post at SEL and the WSJ.

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