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June 29 (Bloomberg) -- News Corp. is closing in on a sale of its Myspace social-networking website to Specific Media, the owner of an online advertising network, for about $35 million in cash and stock, said a person with knowledge of the process.
A deal with Specific Media, based in the Irvine, California, isn’t certain and New York-based News Corp. is still talking with other bidders, said the person, who wasn’t authorized to speak publicly. A transaction may be announced as early as today, the person said.
A sale would rid Rupert Murdoch of a money-losing Web service that lost its lead in social networking to Facebook Inc. after being purchased in 2005 in a $580 million deal. News Corp. had sought about $100 million for Myspace after Chief Operating Officer Chase Carey said in February that he wanted a sale completed by the June 30 end of the company’s fiscal year.
Dan Berger, a spokesman for New York-based News Corp., declined to comment. Specific Media declined to comment, said Meredith Obendorfer, an outside spokeswoman for the company founded by Tim and Chris Vanderhook.
For Specific Media, Myspace’s 34.9 million monthly visitors would provide an audience for its network of online ads. The company was formed in 1999 and created its advertising network in 2002.
Chief Executive Officer Tim Vanderhook takes credit for creating the pop-under advertising unit after the dot-com bust a decade ago. Clients on past campaigns include Jeep dealers in New England, Colorado’s lottery and Air New Zealand, according to Specific Media’s website.
Specific Media raised $100 million from San Francisco-based private-equity firm Francisco Partners in 2007, according to its website. The company has made acquisitions including Broadband Enterprises, or BBE, an online video company.
News Corp. is continuing to talk with Golden Gate Capital, a San Francisco private-equity firm, and other interested parties in case an agreement with Specific Media can’t be reached, said the person.
In preparation for the deal this week, Myspace may cut more than half of its staff, News Corp.’s AllThings D reported yesterday. Rosabel Tao, a spokeswoman for Beverly Hills, California-based Myspace, declined to comment.
Myspace CEO Mike Jones told employees in January that News Corp. intended to spin off or sell the website. Jones led a redesign in October aimed at building online communities around films, TV shows and music.
Jack Kennedy, executive vice president of operations for News Corp.’s digital group, has overseen the sale process, while Allen & Co., a New York-based investment bank, marketed the website to potential buyers.
Facebook, based in Palo Alto, California, had 157.2 million U.S. users in May, according to Reston, Virginia-based Comscore. It has a market value of $71 billion, according to SharesPost Inc., an exchange for stock in privately held companies.
Results for Myspace aren’t broken out in News Corp.’s financial statements. The division that includes Myspace lost $575 million in the fiscal year ended June 30, 2010, according to company reports. During that period, Myspace lost less than $100 million, the website said in an e-mail in October.
News Corp., controlled by Chairman and CEO Rupert Murdoch, climbed 26 cents to $17.18 yesterday in Nasdaq Stock Market trading. The shares have risen 18 percent this year.
--Editors: Anthony Palazzo, Nick Turner
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