News Corp. continued to beef up its Internet presence Monday, agreeing to purchase online-entertainment company Intermix Media Inc. for about $580 million in cash.
Intermix -- which settled a lawsuit for $7.5 million in June, without admitting wrongdoing, by New York State Attorney General Eliot Spitzer alleging that it was distributing “spyware” and “adware” to PCs without proper consent -- has about 30 Internet sites in its portfolio, most of which offer greeting cards, games and quizzes.
The deal will place the Intermix sites within News Corp.’s newly created Fox Interactive Media unit.
As part of the deal, Intermix will acquire the 47% it doesn’t already own of social-networking site MySpace.com (www.myspace.com), its biggest asset. According to News Corp., MySpace.com is the fifth-ranked Web domain in terms of page views, and it served 8% of all of the ads on the Internet in June.
The deal represents about $12 per share for Intermix (a 12% premium over its July 15 stock price of $10.70), and it nearly doubles News Corp.’s Internet traffic to 45 million unique users per month.
“We see a great opportunity to combine the popularity of Intermix's sites, particularly MySpace, with our existing online assets to provide a richer experience for today’s Internet users," News Corp. chairman Rupert Murdoch said in a prepared statement.
The deal is expected to close in the fourth quarter. Intermix CEO Richard Rosenblatt and MySpace CEO Chris DeWolfe will continue in those roles after the acquisition is completed, joining Fox Interactive, led by Ross Levinsohn.
Intermix’s largest shareholder, VantagePoint Venture Partners, has agreed to vote its 22.4% interest in the Internet company in favor of the deal.
In a research report, UBS Warburg LLC analyst Aryeh Bourkoff saw the deal as positive because “it indicates an incrementally more aggressive online strategy, with a proprietary platform over which News Corp. can leverage branded content against attractive Internet growth, allowing it to cross-leverage brands and capturing full economics.”
News Corp. shares were down 6 cents in afternoon trading Monday to $17.41. Intermix shares rose $1.02 each (9.5%) to $11.74 in afternoon trading.