Microsoft mulls media options, no new talks: source

By Eric Auchard and Kenneth Li

SAN FRANCISCO/NEW YORK (Reuters) - Microsoft Corp has had no new negotiations on deals involving Yahoo Inc, but preliminary talks with media companies continue, a source familiar with the software giant's thinking said on Wednesday.

The media companies have included Time Warner Inc, which owns AOL, and News Corp, parent of MySpace, the source said.

Shares of Yahoo jumped as much as 9 percent earlier in the day, after the Wall Street Journal reported that Microsoft, positioning for a new run for Yahoo's search business, had in recent days approached media companies to join together on a deal that would effectively lead to Yahoo's breakup.

However, the Reuters source and a CNBC report, citing unnamed sources, later said there were no new talks or negotiations.

The Journal also reported Microsoft had met with activist investor Carl Icahn in recent days to encourage him to press his proxy battle for control of Yahoo's board, the first sign Microsoft welcomed his month-old campaign. This development also was attributed to unnamed sources familiar with the talks.

Icahn was not available to comment on the report.

Microsoft, Yahoo, Time Warner and News Corp all declined comment.

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