A handful of venture capital firms and other companies are expected to make News Corp offers for one of its most disappointing properties: MySpace, according to a person familiar with the matter.
Around five or more bids to buy all or part of the one-time social networking pioneer are expected, valuing the Los Angeles-based company at more than $100 million, according to this person. News of the latest planned bids and expected valuation was first reported by Wall Street Journal on Tuesday.
Among the names expected to bid are private equity firm THL Partners, Redscout Ventures and Criterion Capital, which owns social networking site Bebo. Other names, including Chinese Internet holding company Tencent and Myspace co-founder Chris De Wolfe, have also had a look at the company’s books to see if it’s worth a bid.
News Corp declared it was ready to sell MySpace in an earnings call last February. At that time, in spite of a massive redesign, the company “recorded a $275 million pre-tax charge for the impairment of goodwill related to the Digital Media Group and an organizational restructuring at MySpace.”
The media giant bought the social networking and music site at the height of its popularity as part of the takeover of Intermix in 2005. Murdoch paid $580m for the company, beating out other media companies. Like Friendster, Myspace was a pioneer of the social networking space between 2005 to 2007, but it soon lost out to Facebook.
In 2005, the 1.5-year-old Facebook hadn’t even acquired the ‘Facebook.com’ url and recorded a net loss of $3.63 million for the year. Even as late as 2007, Facebook’s traffic was disappointing when compared to MySpace’s one.
But all that changed quickly. MySpace users began abandoning ship for Facebook, and in late 2009, site traffic took a dive from which it never really recovered. By 2010, even relative upstart Twitter was getting more traffic than MySpace.
Even though last year News Corp relaunched the site as a social entertainment site with a focus on music, movies and celebrities, MySpace is still losing ground in these creative industries. The site reported an operating loss of $156 million for the quarter ended 31 December 2010.
While separate results for MySpace are not available, News Corp’s “other” segment, which includes the social network, reported a second quarter operating loss of $156 million, down $31 million from the previous year.
Against this, News Corp’s net profit rose from $254 million while its overall revenue increased slightly to $8.76 billion, mainly on the strength of its TV affiliate’s revenue and advertising market.
Earlier this year, MySpace was forced to cut some 500 jobs, nearly half of its staff, following a continued fall in its traffic and ad revenues.
Online music video site Vevo is also reported to have looked at a possible deal with MySpace, but the company has since lost interest in the site, said another report.
In March this year, MySpace had 36.1 million unique visitors, its lowest monthly total since February 2006, and a 49 per cent drop from a year earlier, according to comScore Inc.