Media conglomerate News Corp is in talks with Microsoft and Yahoo for an advertising deal with its group firm MySpace, as an existing contract with Google expires in August, a media report said.

Attributing to people familiar with the matter, the Wall Street Journal said, "News Corp is in discussions with Google Inc, Microsoft Corp and Yahoo Inc about replacing MySpace's crucial search-advertising partnership with Google, which expires next month."

Under the existing deal, Google had agreed to make up to USD 900 million in guaranteed payments for the right to sell small ads as users surf and tap out searches on My Space.com and on a handful of smaller News Corp websites.

However, MySpace has fallen short of web traffic recently and other milestones laid out in the Google contract, which will expire at the end of August.

The people familiar to the matter also said that News Corp has been been discussing new, narrower advertising deals with Google and other companies in the past few weeks.

Moreover, the new deal is expected to be for significantly less money compared to before and this would be a further financial challenge for MySpace, which has seen ad revenues slip, the WSJ report added.

The MySpace website is also in the midst of a remodeling to stand apart from Facebook, which has surpassed it as the dominant social networking site.

MySpace attracted 109 million unique world-wide visitors in May, down nearly 13 per cent from the same month last year, according to comScore Inc.

MySpace has also cut about 30 per cent of its work force and News Corp took a USD 450 million hit last year to write down the value of MySpace and other digital businesses.