Report: News Corp. to trade MySpace for a stake in Yahoo?

Here's a rumor we didn't see coming. The U.K.'s The Times is reporting that News Corp., the Rupert Murdoch-helmed company that purchased MySpace in 2005 for $580 million, may be willing to trade it. According to Times writer Dan Sabbagh's article, News Corp. is mulling a swap of MySpace to Yahoo in exchange for a 25 percent stake in the dot-com.

Interestingly enough, The Times is itself owned by News Corp. The parent company is allegedly "interested in a deal even if it means losing some control of MySpace because it would give the media group exposure to a far larger internet-based business," the story reads. Sabbagh notes, however, that the purported talks may fall through now that Yahoo's chief executive, Terry Semel, has stepped down from his post and been replaced by company co-founder Jerry Yang.

According to the Times, News Corp. mogul Murdoch has acknowledged that MySpace's most promising potential rival, Facebook, has been gaining ground in the wake of recent growth fueled by its recently launched developer platform. Yahoo, likewise, is allegedly interested in breaking into the social networking arena, where it currently is not a major player.

News Corp. is simultaneously attempting a $5 billion bid for fellow media company Dow Jones. At the same time, rumors that Yahoo would merge with Microsoft turned out to be unsubstantiated.

UPDATE: Both MySpace and Yahoo declined to comment on the matter.