This rumor was floating around over the summer. It didn't make much sense then and it makes less now.
Melo and Karl have bad blood at this point. No way Melo would waive his no trade to play for him. And not in a market like Sacramento and that trade would leave Melo and Rudy Gay as the two best players on the team - playing the same position. Only ESPN could be that dumb.
I would consider moving Melo if he's unhappy and to jump start a rebuild here, but I think it'd have to be a team like the Clippers, Bulls, or Wizards. He'd want to go to a major market and a contender.
Wizards - he's from Baltimore and could be a local hero, especially if Wiz strike out on Durant.
Bulls - he makes a certain amount of sense with that roster and they wanted him before.
Clippers - pals with Chris Paul, lives in LA offseason, would make them a big contender in the West.
I could see maybe Houston and or Dallas wanting to be involved.
But Melo has a no trade clause and they'd have to work with him.
That said, he seems to want to make it work here and he still adds a lot of value to this team and takes pressure off KP to develop too quickly. I think having Melo here and keeping the team competitive for now actually helps KP's development.