EBay to put China site into JV: source

The eBay China deal would closely parallel one by rival Yahoo Inc. <YHOO.O>, which last year also ceded control of its China search operation to Alibaba Inc., a locally controlled online marketplace and auction site operator.

Under that deal, Yahoo paid $1 billion and rolled its China search site -- which it purchased in 2003 for $120 million -- into Alibaba's broader operations in exchange for a 40 percent stake in Alibaba.

In another similar deal, media giant Time Warner <TWX.N> in 2003 sold a controlling stake in its struggling China TV station, CETV, to Tom Group.

China is one of the world's fastest growing media markets, with about $500 million in online ad spending and as much as $75 billion in e-commerce last year, according to various estimates. But it is also one of the toughest, due to its high fragmentation and heavy government oversight.

In a sign that local ownership is not always a quick fix, both CETV and the former Yahoo China search site have continued to fight uphill battles since the ownership changes.

The former Yahoo China search site has reportedly struggled following the Alibaba takeover, with Yahoo China's recently named president resigning in November less than two months after taking on the job.

Likewise, CETV -- limited to mass broadcasting rights in affluent Guangdong province -- has yet to make a major dent in the local ratings three years after the ownership change.

(Additional reporting by Fang Yan in Shanghai)