News Corporation has held talks about giving up control of Myspace to Vevo, the music video site owned by several of the world's biggest music labels.

After kicking off a strategic review looking to sell or spin off the declining social networking website last month, News Corp initially approached Vevo about acquiring Myspace, according to US media reports.

This offer was reportedly rebuffed, with talks now focusing on exchanging Myspace for a stake in a new venture with Vevo, which is owned by Universal Music, Sony Music and Abu Dhabi Media Company.

Sony and Universal are also investors in Myspace Music, the part of Myspace that streams songs online. One report said the chances of a new joint venture deal with News Corp were "very slim".

A spokeswoman for News Corporation declined to comment. Vevo was unavailable for comment at the time of publication.

News Corp hired investment bank Allen & Co to evaluate strategic options and offers for Myspace, with the aim of tieing up a deal before the end of the company's financial year in June. Vevo was one of as many as 20 parties taking a look at the social networking website.

In theory News Corp is looking at all possibilities, but insiders say that the company is gearing up for a sale or spin off that could come through a demerger. Myspace was acquired by News Corp for $580m (£363m), and News is not confident that it can achieve a higher valuation than that at the point of disposal – although the company is trying to achieve a price tag of more than $100m.

Vevo, which is gearing up for a launch in the UK – most likely next month, after plans to launch in March were pushed back – launched in the US in December 2009.

Earlier this month there were reports that News Corp had held talks with fast-growing social gaming company Zynga about a stock-based deal. But Zynga is understood to be concerned about News Corp's valuation.

As the rise of Facebook has continued unabated, Myspace has suffered from a loss of users and, as a result, advertisers and in January confirmed that it was to cut almost half its staff.