29th June 2011
The sale of its Myspace social-networking website to Specific Media, the owner of an online advertising network, for about $35 million in cash and stock, may be announced soon according to an industry insider, reports Bloomberg. However, the deal with Specific Media, based in the Irvine, California, isn't certain and New York-based News Corp is still talking with other bidders.
Specific Media and Golden Gate Capital are the two companies tipped to buy social networking site MySpace as it looks to axe up to 300 jobs, reports the Guardian. Any deal is expected to be between $20m (£12.5m) and $30m, according to US technology and digital media blog AllThingsD.
Rupert Murdoch's media group could choose between the offers by the middle of this week as it seeks to complete the deal before the end of its fiscal year on June 30.
But one person familiar with the talks confirmed that News Corp would retain a stake, and said it would also shoulder the cost of another deep cut to MySpace's staff, which has already fallen to 500 from 1,400 in 2009, according to the Financial Times (paywall).
The difficulties surrounding the sale of MySpace and anticipated low selling price contrasts sharply with investor appetite for other social network sites. Recent investments in Facebook have put a $70bn private market valuation on the company, and LinkedIn has a market capitalisation of $8bn since its initial public offering in May.
However, a sale should allow News Corp to move MySpace's losses off its books, says the Financial Times (paywall). News Corp recouped its initial investment with a $900m search advertising deal with Google, but the site has reported heavy losses. Other groups reported to have shown interest in buying MySpace have dropped out, including Vevo, the music video site.
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