Mr. Miller is considering a deal that would value the company at $20 to $22 a share, far less than the $33-a-share bid Microsoft made for the company last spring, but about double Yahoo's opening share price of $10.84.
Yahoo shares rose only 6.5% to $11.44 on the news, meaning the market considers the deal a bit of a long shot. It would mean raising $28 billion to $30 billion, a tough task in tightened credit markets.
Through a spokesperson, Mr. Miller declined to comment on the WSJ report.
But Mr. Miller isn't the first to suggest that at about $10 a share Yahoo is a bargain. Activist shareholder Carl Icahn, who took a place on Yahoo's board during the summer, purchased an additional 6.8 million shares last week at an average of $9.98 a share. The share purchases boosted Mr. Icahn's stake to 5.5%.
Yahoo is in the midst of a search for a CEO to replace Mr. Yang, who announced he was stepping down last month.
Having converted AOL from a portal to access the internet to an advertising business, Mr. Miller has been considered a likely candidate for the job. Mr. Miller runs a venture-capital firm, Velocity Interactive Media, with former CEO of Fox Interactive Media, Ross Levinsohn.