News Corp. is moving toward a deal for Myspace, with a strategic partnership appearing more likely than a straight sale, according to a WSJ story (News Corp. owns WSJ). Not long after Myspace announced 1/11 it was cutting some 500 jobs (nearly half its staff), Myspace CEO Mike Jones told remaining employees that News Corp. is exploring a sale, merger or spinoff of the social media (now “social entertainment”) website.
While News Corp. has long considered a variety of deals for the struggling social network, from offloading it entirely to maintaining a stake, the lack of a bidder willing to come in and sweep it away at a high price has increased the odds that the media conglomerate will keep a stake in Myspace, according to the story.
Certainly, a sale is still possible, however, most bids have come in significantly lower than the $100 million News Corp. was seeking. News Corp. paid $580 million for Myspace in 2005.
A number of firms remain interested, according to the story, and some firms were expected to file late bids by 6/3. But at least two firms that were weighing a bid—private-equity firm Thomas H. Lee Partners in a partnership with Redscout Ventures and Criterion Capital Partners LLC —are no longer considered serious contenders, said WSJ. Other potential bidders named by Wall Street Journal include Tencent and the site’s co-founder Chris De Wolfe.
News Corp., which started accepting bids for Myspace around April, hopes to narrow the pool of offers to one or two in the next two weeks.
Bidders have been combing through financial details and traveling to Beverly Hills to meet with Jones, who has also been contemplating bidding for the site with financial backers.
Myspace drew 37.1 million unique U.S. visitors in April, down 46% from the same period last year and down from 70.9 million in April 2009, according to comScore. The News Corp. segment that includes Myspace reported an operating loss of $165 million in the most recent quarter due primarily to lower advertising and search revenues.
RBR-TVBR observation: The problem for Myspace is that most of what the company can offer as a social entertainment site to a buyer has already been transacted with other companies. Facebook, for example, recently signed a social music sharing and discovery deal with Spotify. Perhaps the folks at soon-to-be Facebook competitor Altly may be interested. Altly founder Dmitry Shapiro is the former CTO for Myspace.