Rupert Murdoch's News Corporation, the world's largest media conglomerate company by market capitalization, is apparently discussing with Yahoo about a deal between the two companies that would hold off Microsoft’s approach.

The New York City-headquartered company is considering a move that would result in the merger of MySpace and other of Murdoch’s web interests with Yahoo, the Wall Street Journal wrote.

The terms of the eventual deal would see Yahoo give 20% of its shares to News Corp. this would allow Yahoo to remain independent.

Microsoft has offered to acquire Yahoo for more than $40bn (£20.5bn). Yahoo! Inc. said it wasn’t interested in such a move because it would under evaluate its brand, audience, investments in advertising platforms and future growth prospects, free cash flow and earnings potential.

The possible deal between the two corporations would not only allow Sunnyvale, California- based Yahoo to retain its independence, but would also bolster News Corp.'s online advertising assets.

Julie Henderson, spokeswoman for News Corp., declined to comment, while spokeswoman Tracy Schmaler said that Yahoo’s board is still evaluating its options.

The so-called “secret” talks were reported yesterday by the blog TechCrunch.

However, Wall Street doesn’t put too much weight on this or other possible alternatives Yahoo might find, such as the possible merger with Time Warner Inc.'s AOL. Such deals wouldn’t actually help Yahoo catch up to Google Inc. Yahoo in Web search.