News Corp. to sell MySpace this week

Friday, June 24, 2011, Vol. 35, No. 25

LOS ANGELES (AP) — News Corp. is aiming to sell its struggling social network site MySpace this week and will likely lay off more than half of the staff, according to a person familiar with the matter.

The company hasn't selected from among several buyers yet, according to the person, who was not authorized to comment publicly and spoke on condition of anonymity. At least three bidders are still in the running — Specific Media, Golden Gate Capital and Austin Ventures.

The company is looking to cut a deal Wednesday or Thursday in order to have it completed this 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, the sale marks a stunning reversal from 2005, when News Corp. bought the startup for $580 million and social networking was in its infancy.

Since then, Facebook has turned into the dominant platform with more than half a billion users. A recent investment by private fund GSV Capital Corp. valued Facebook at $50 billion.

MySpace unveiled an extensive overhaul in October in an attempt to transform itself into a hub for consuming entertainment content. Then in January, it cut nearly half its staff, or about 500 people, aiming to put it on a path to profitability. MySpace now has about 500 people.

The site still bled red ink, and for the three months through March, the News Corp. segment housing MySpace lost $165 million, worse than the $150 million loss it posted a year earlier, mainly because of lower advertising revenue at the site.

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.