News Corp.'s MySpace Said to Extend Google Ad Deal by One Month Amid Talks

MySpace.com extended a search advertising contract with Google Inc. by one month as the News Corp.-owned social-networking website tries to secure a new agreement, according to two people with knowledge of the talks.

The people, who sought anonymity because the discussions are confidential, wouldn’t identify contenders for a new MySpace pact. MySpace, based in Beverly Hills, California, has held talks with Microsoft Corp., Yahoo! Inc. and Google to replace the contract, people familiar with the talks said in July.

The extension is the second with Google, which agreed to pay $900 million over three years to place ads on MySpace. The accord was set to expire in June and was previously extended to the end of August. MySpace President Mike Jones is trying to replace the contract as he introduces features to revive the website, which fell behind Facebook Inc. in worldwide users in April 2008.

Aaron Zamost, a spokesman for Mountain View, California- based Google, and MySpace’s Jones both declined to comment.

MySpace said today it will allow users to sync accounts with Facebook as it aims to make it easier for users to share messages, photos and games across the Internet.

News Corp. Chief Operating Officer Chase Carey said on Aug. 4 that MySpace was “actively engaged” in reaching a new search ad deal, which will likely be worth less than the expiring Google contract. The new agreement will be performance based, Carey said.

MySpace’s traffic fell short of commitments to Google, lowering the most recent fiscal year’s income on the deal by $100 million, the company projected in 2009. The site has also struggled with management turnover since News Corp. purchased it for $580 million in 2005.

The unprofitable unit is aiming to be “cash positive” going into 2011, Carey said in May.

News Corp., the New York-based media company controlled by Chairman and Chief Executive Officer Rupert Murdoch, fell 5 cents to $12.31 today in Nasdaq Stock Market trading. The shares have declined 10 percent this year.

To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

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