In a teleconference with analysts and journalists yesterday about News's second quarter results, Mr Murdoch said he was confident he could come to a "friendly and fair resolution" with Mr Malone's Liberty Media, which owns 18 per cent of News's voting stock.
However, he warned he wasn't in the mood to trade any valuable assets or spend large amounts of cash to get Mr Malone off his back.
"We may be able to take back and cancel some of [Liberty's News Corp] shares in return for some cash and maybe some asset which they would value more than we would value," Mr Murdoch said.
"But we are certainly not going to be giving up big assets which we have really big plans for. Nor are we going to have our cupboards cleaned out of all our cash. There is plenty of room to talk."
As far back as last April, Mr Malone, who is chairman of Liberty Media, said he was in talks with Mr Murdoch about swapping some of his voting stock in News for TV production and programming assets. Liberty holds a swag of media assets including entertainment networks Encore and QVC, and investments in Time Warner and communications provider Sprint Corp.
Last April, Mr Malone would not name the assets he was most interested in but said he was having "fairly active" talks with News about international and non-fiction programming.
At the time, News Corp denied any such talks.
By November, Mr Malone had doubled his stake in News, strengthening market expectations the two companies would do a deal.
Analysts have speculated that News's January announcement it would buy back the 17.9 per cent of shares in Fox Entertainment it didn't already own could make a deal with Liberty more tax effective. However, News has denied this.
Mr Murdoch said it could be six to nine months before any agreement was reached with Liberty and he would not be drawn on any asset swaps.
