The talks come as Yahoo! struggles to regain momentum in the face of an onslaught mounted by rival Google (GOOG - Get Report), which has steadily won search advertising market share. Google's gains have called into question the growth strategies at Yahoo!, MSN and Time Warner's (TWX) AOL.
Meanwhile, big media companies are struggling to cash in on the digital media revolution they see unfolding before their eyes. News Corp. (NWS - Get Report) made what is acknowledged as the market-leading move last year by agreeing to buy social networking site MySpace. It's the apparent success of that venture -- MySpace traffic continues to rise sharply, even as gains elsewhere on the Net slow -- that has made Facebook all the more alluring to Internet and media companies. Viacom Chairman Sumner Redstone pointed to the company's failures in digital media earlier this month when he fired CEO Tom Freston.Still, there are doubters who point out that even the plum properties, such as Facebook and MySpace, have yet to formulate a surefire plan to cash in on all the traffic they draw from younger users without driving those users away.