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. T
The company hasn’t chosen a front-runner yet, according to the person, who was not authorised to comment publicly and spoke on 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 $US20 million ($A19.2 million) to $US30 million ($A28.79 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 $US580 million ($A556.68 million) when social networking was in its infancy.
Since then, rival site Facebook has turned into the dominant social media platform with more than half a billion users.
A recent investment by private fund GSV Capital Corp valued Facebook at $US50 billion ($A47.99 billion). LinkedIn Corp, a social network for professionals, recently went public and now has a market capitalisation of about $US8 billion ($A7.68 billion).
The low estimate for MySpace suggests there may only be residual value in its brand, technology and declining visitor base, said Debra Aho Williamson, principal analyst with research firm eMarketer.
“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 $US165 million ($A158.36 million).
That was worse than the $US150 million ($A143.97 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 $US1.4 billion ($A1.34 billion) cumulatively.
According to tracking firm comScore Inc, MySpace had 74 million visitors from around the world in May, down 32 per cent from a year earlier.
By comparison, Facebook had 1.1 billion, up 26 per cent; Twitter had 139 million, up 54 per cent; and LinkedIn had 86 million. ©2011AP
