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Murdoch dashes Yahoo hopes

Rupert Murdoch dimmed further the hopes of Yahoo executives seeking to rebuff Microsoft’s takeover campaign by playing down News Corp’s interest in the internet company.

“We’re not going to get into a fight with Microsoft, which has a lot more money than us,” Mr Murdoch, chief executive of the media company, said on Monday.

Yahoo executives, desperate for an alternative to Microsoft’s $40bn offer, had reached out to News Corp in recent weeks. The two companies had discussed a deal in which News Corp would merge its MySpace social networking site and other internet assets into Yahoo in exchange for a minority stake in the company.

Yet Wall Street analysts and investors had widely dismissed such a transaction, arguing it could not match the value offered by Microsoft. Mr Murdoch’s comments on Monday appeared to endorse that view.

The News Corp chief, who last month vowed he was “definitely not going to make a bid for Yahoo”, on Monday went a step further by praising Google, which handles MySpace’s search advertising. “We’re very happy to be in the Google camp. They sell our search advertising and pay us well for it,” Mr Murdoch said, adding: “Yahoo missed out.”

News Corp’s unwillingness to fight for Yahoo leaves it with one other potential alternative, Time Warner, which has proposed merging its AOL division into Yahoo.

Nonetheless, in spite of high-level discussions, investors remained sceptical. One referred to their talks last week as “grasping at straws”.

Microsoft had been expected to turn hostile in its bid if it could not reach a friendly agreement by the end of this week – the deadline for it to submit a new slate of directors to start a proxy fight for control at Yahoo’s annual meeting.

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