• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

News Corp.'s Youth Move New Media Company to Cost $580 Million

Posted on: Tuesday, 19 July 2005, 12:01 CDT

News Corp., making one of its largest bets on the Internet, said Monday that it would pay $580 million to acquire Intermix Media, a Los Angeles-based company whose chief asset is MySpace.com, a Web site that is enjoying surging popularity with young audiences.

The price of the deal is sure to ignite debate about valuations and durability of new media companies because MySpace, the main attraction among Intermix's 30-odd Web sites, is only two years old. MySpace.com is a youth-oriented music and "social networking" site that has quickly grown to more than 16 million monthly users. Its members spend hours at a time on the site perusing areas devoted to personal ads, music, Web logs, video games and chat rooms. Several prominent music groups, including the Black Eyed Peas, R.E.M. and Nine Inch Nails, have introduced their latest releases by streaming them on MySpace. Also, major corporations including Procter & Gamble and Sony Pictures have advertised on the site to peddle their wares, and NBC ran a streaming preview of the comedy "The Office" this year. According to News Corp., MySpace attracts the fifth-most page views of any Web site.

Intermix's other Web businesses include sites with names like grab.com and flowgo.com. Their addition to News Corp.'s existing Web site operations will nearly double the company's U.S. Web traffic to 45 million unique monthly users, News Corp. said. The deal comes after the formation Friday of a new unit within News Corp., Fox Interactive Media, which will house Intermix as well as sites like foxsports.com, foxnews.com and fox.com. "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," said Rupert Murdoch, chairman and chief executive of News Corp.

Intermix gained notoriety this year when the New York State attorney general sued it for illegally planting "spyware" programs on computers used to visit its Web sites. The company has announced a preliminary $7.5 million out-of-court settlement over the matter.

News Corp. will pay $12 a share for the outstanding shares of Intermix, while Intermix said it would buy out the minority partners who currently own 47 percent of MySpace. MySpace was started in September 2003 by the entrepreneurs Chris DeWolfe, the company's chief executive, and Tom Anderson, president. They had sold a previous company to Intermix, which provided funding to the venture. Like most traditional media players, News Corp. has had a mixed experience in trying to extend its businesses online, and watched with interest and perhaps alarm as companies like Google and Yahoo have attracted ever-higher stock-market valuations.

Intermix over all reported earnings of $4.5 million on $78.9 million in revenue the quarter ended March 31, compared with a loss of $12.4 million on revenue of $57.3 million in the year-earlier period. Intermix shares finished $1.02, or 9.5 percent, higher at $11.74. News Corp. shares fell 7 cents to $16.57.

Source: International Herald Tribune

More News in this Category