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News Corp. to sell MySpace; layoffs likely
Question of the Day
LOS ANGELES — News Corp. is aiming to sell struggling social network site MySpace this week after three years of massive losses, according to a person familiar with the matter. The move will likely result in the layoff of more than half of the site’s remaining 500 workers.
At least three bidders are still in the running — online advertising network Specific Media, private equity fund Golden Gate Capital and Austin Ventures, an investment fund that is working with MySpace co-founder Chris DeWolfe.
The company hasn’t chosen a front-runner yet, according to the person, who was not authorized to comment publicly and spoke on the condition of anonymity.
News Corp. is looking to cut a deal Wednesday or Thursday in order to have it completed in its fiscal year, which ends Thursday.
Earlier, the News Corp.-owned website All Things D reported that MySpace was on the verge of being sold for $20 million to $30 million. The person said the deal price will likely be much higher and include a combination of cash and stock.
Even so, any sale around that price would mark a stunning reversal from 2005, when News Corp. bought the promising startup for $580 million when social networking was in its infancy.
Since then, rival site Facebook has turned into the dominant social media platform with more than a half-billion users. A recent investment by private fund GSV Capital Corp. valued Facebook at $50 billion. LinkedIn Corp., a social network for professionals, recently went public and now has a market capitalization of about $8 billion.
“It shows that this is just something that News Corp. wants to get off of its books at any price it can get,” she said.
MySpace unveiled an extensive overhaul in October in an attempt to transform itself into a hub for consuming entertainment content, but it didn’t help reverse visitor declines. In January, it slashed nearly half its staff, or about 500 people, aiming to put it on a path to profitability.
The site still bled red ink, and for the three months through March, the News Corp. segment that includes MySpace lost $165 million. That was worse than the $150 million loss it posted a year earlier, mainly because of lower advertising revenue at the site. That marked the 11th straight quarterly loss since mid-2008, over which time the segment lost about $1.4 billion cumulatively.
According to tracking firm comScore Inc., MySpace had 74 million visitors from around the world in May, down 32 percent from a year earlier. By comparison, Facebook had 1.1 billion, up 26 percent; Twitter had 139 million, up 54 percent; and LinkedIn had 86 million.
By Tom Harris and Madhav Khandekar
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