News Corp. acquires Intermix for $580 mil
HOLLYWOOD — Rupert Murdoch is spending over half a billion dollars to try to turn the Web’s most popular meeting place for teens and twentysomethings into a profitable part of his media empire.
In the first major deal for its newly formed Internet group, News Corp. is acquiring Intermix Media, parent company of social networking site MySpace, for approximately $580 million in cash.
MySpace, on which the mostly young users post profiles and blogs and share media they like, ranked as the fifth most visited site on the Web in May, with more than15 million unique visitors. It was previously one of the few top sites not affiliated with a major tech or media company.
Intermix also runs a number of smaller sites with low-cost content such as games and cartoons, as well as online marketing company Alena.
Acquisition falls under the aegis of Fox Interactive Media, a unit formed last week to oversee all of News Corp.’s online properties as it expands them to take advantage of the again-booming digital media biz (Daily Variety, July 18).
Buying MySpace not only gives News Corp. a foothold in social networking and blogs — two of the hottest trends in online content — but gives it a major outlet for marketing its products to young auds moving away from TV.
MySpace lets users create nearly all of its content; figuring out how best to utilize the service as part of a corporate conglom will be a major challenge.
“They’re a bottom-up company and we’re a top-down company,” admitted Fox Interactive topper Ross Levinsohn. “We have to find ways to integrate our brands without forcing something on a successful business.”
Once MySpace is a part of the Fox empire, though, Levinsohn said he’ll focus on findings ways to help conglom’s broadcast and theatrical marketing, which already advertise on the site.
“In terms of reaching consumers, this is a quantum leap for us,” he said.
Intermix previously owned 53% of MySpace, but it acquired the remaining minority shares as part of the deal to give News Corp. complete control.
Intermix CEO Richard Rosenblatt and MySpace topper Chris DeWolfe both will stay on and report to Levinsohn once the deal is complete.
Though pioneer Friendster.com grabbed the most attention two years ago when the phenomenon of online social networking began, MySpace has since eclipsed it to become the category’s top company, particularly among teens and twentysomethings.
Bands big and small use it to reach fans, and media companies are utilizing it to distribute promotional content online. NBC earlier this year streamed an episode of “The Office” on MySpace two weeks before it aired, while this week Atlantic is offering an exclusive track from indie rock band Death Cab for Cutie’s latest album “Plans” a month before its release.
Conglom has been talking to Intermix for about a month, but deal came together in a marathon negotiation that started Saturday morning and ended at 4:30 a.m. Monday.
News Corp. will pay $12 per share for Intermix, repping a 12% premium over Friday’s closing price. Deal is expected to close in the fourth quarter.
Intermix stock closed up 9.5% at $11.74 Monday, while News Corp stock was flat at $17.45.