Media and entertainment giant News Corp. (NWS) is nearing a deal to sell its struggling social entertainment site Myspace as it narrows down on two bidders, with Specific Media being the frontrunner followed by private equity firm Golden Gate Capital, according to reports on Tuesday. However, media mogul Rupert Murdoch's News Corp. expects to retain a minority stake in the site.
News, which paid $580 million in July 2005 for Myspace, is only expected to get between $20 and $30 million in cash and stock from the sale now. In April, Myspace drew 37.1 million unique U.S. visitors, a year-over-year decline of 46 percent.
News Corp. began accepting offers for Myspace, part of its digital media unit, in April and several firms are said to have shown interest. The company hoped that Myspace would fetch them about $100 million.
Private-equity firm Thomas H. Lee Partners in a partnership with Redscout Ventures and Criterion Capital Partners LLC were previously said to be interested in the deal. However, they are not considered serious contenders now, the reports said. Social networks Tagged Inc. and myYearbook were also said to be in the fray.
In late March, Bloomberg reported that News is in talks with online music video website Vevo.com to hand over control of social network website Myspace.
News Corp. acquired Myspace through its acquisition of eUniverse (now renamed Intermix Media) in July 2005. Myspace has attempted to redefine itself as a social entertainment website, with more of a focus on music, movies, celebrities and TV, instead of a social networking website as it failed to innovate enough against stiff competition faced from the ever popular Facebook.
News Corp. had reportedly hired investment bank Allen & Co. to evaluate offers for Myspace with a projected divestiture before the end of its fiscal year in June.
NWS closed Tuesday's regular trading session at $17.61, up $0.17 or 0.97 percent on a volume of 1.59 million shares, lower than the three-month average volume of 2.16 million shares.
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