News Corp. has been mentioned as a potential alternative suitor for Yahoo since the news of Microsoft's $44.6 billion bid broke.

The rumor has been given new life by a Silicon Alley Insider report by Peter Kafka and TechCrunch's Michael Arrington, who claims marathon negotiation sessions are underway to spin off Fox Interactive Media (including MySpace) into Yahoo. A multibillion-dollar cash injection from News Corp. and an "unnamed private equity fund" would also be part of the alleged deal, says Arrington.

It may be only a rumor, but it's just the type of information that's sure to get Steve Ballmer's heart racing. He badly wants his deal with Yahoo to go through, and Rupert Murdoch is one of the few people on this planet who can stop it from happening.

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