News Corp. chairman Rupert Murdoch kept his promise made last year to increase the media giant's Internet presence, agreeing last week to purchase Intermix Media Inc. for about $580 million in cash.
Intermix, which operates more than 30 Internet sites, will be folded into the newly created Fox Interactive Media unit, an Internet division that houses the Web sites of News Corp.'s sports and entertainment holdings such as foxnews.com, fox.com and foxsports.com and is headed by former online sports chief Ross Levinsohn.
As part of the deal, Intermix will acquire the 47% it doesn't already own of social-networking site MySpace.com, its biggest asset.
News Corp. called MySpace.com the fifth-ranked Web domain in terms of page views. It is also becoming a force in the online advertising market — News Corp. claims MySpace.com served 8% of all the ads on the Internet in June.
MySpace has some baggage, though. In June, the Web site settled a pending lawsuit from New York State Attorney General Eliot Spitzer that claimed MySpace was distributing “spyware” and “adware” to personal computers without proper consent. Intermix agreed to pay a $7.5 million fine to settle the suit but admitted no wrongdoing.
The deal represents about $12 per share for Intermix (a 12% premium over its July 15 stock price of $10.70 per share), and nearly doubles News Corp.'s Internet traffic to 45 million unique users per month.
The deal is expected to close in the fourth quarter. Intermix Media CEO Richard Rosenblatt and MySpace CEO Chris DeWolfe will continue in those roles following the completion of the acquisition.
Intermix's largest shareholder — VantagePoint Venture Partners — agreed to vote its 22.4% interest in the Internet company in favor of the deal.
Acquiring MySpace appears to be a good fit for News Corp., even though the social-networking site has a slightly risqué bent. That surprised Fulcrum Global Partners analyst Richard Greenfield, who noted that networks are especially sensitive, given the federal government crackdown on indecency.
“That being said, other than MTV we believe the Fox brand is probably the most logical fit with Myspace.com's content slant,” Greenfield wrote in a research report.
Greenfield also said that of MySpace's Groups, The O.C. (a Fox show) is No. 1 with 80,000 members and The Simpsons (another Fox TV show) is No. 5, with over 20,000 members.