MySpace Sale, Merger or Spinoff Being Weighed by News Corp., Official Says
News Corp. is considering a possible spinoff or sale of MySpace, a day after cutting almost half of the social-networking website’s workforce.
Mike Jones, the Internet unit’s chief executive officer, told employees of plans for the site’s future at a companywide meeting today, Rosabel Tao, a spokeswoman for Beverly Hills, California-based MySpace, said today in an interview.
“News Corp. is assessing a number of possibilities including a sale, a merger and a spinout,” Tao said. “The process has just started.”
The announcement signals News Corp.’s unwillingness to bear the unit’s continuing losses, which amounted to less than $100 million in the year ended in June, an official for the site told Bloomberg in October. MySpace fired 47 percent of its staff yesterday, about 500 employees, to help reach profitability after the site was redesigned to focus on entertainment.
News Corp., based in New York, fell 5 cents to $14.36 at 4 p.m. New York time in Nasdaq Stock Market trading. The Class A shares gained 6.4 percent last year.
If it decides on a spinoff, News Corp. plans to help fund the business, and MySpace employees would be eligible for shares in the independent company, said two people who attended Jones’s meeting. The talks with News Corp. are still preliminary, Jones told staff, according to the people, who asked for anonymity because the meeting was private.
News Corp. wants to bring in partners to help MySpace work in a more entrepreneurial fashion, according to another person familiar with the spinoff plans.
Jack Kennedy, executive vice president of operations for News Corp.’s digital media group, was appointed to handle inquiries from possible buyers, two people said.
Divesting MySpace would benefit News Corp. investors, David Joyce, an analyst for Miller Tabak & Co., said in an e-mail. They probably wouldn’t want to keep a stake in a publicly traded MySpace, he said.
“We’re considering a number of strategic options for the business,” Julie Henderson, a spokeswoman for News Corp. in Los Angeles, said in an interview.
Chase Carey, News Corp.’s chief operating officer, said on a November conference call that MySpace’s losses “are not acceptable or sustainable.” He set a goal for the site to be cash positive by June.
MySpace unveiled a new look in October aimed at winning back younger users uninterested in using the same social network as their parents.
The site has seen an uptick in new and returning users since the redesign, Jones said a statement yesterday announcing the firings. More than 3.3 million new profiles have been created since the redesign, and mobile users rose 4 percent between November and December to more than 22 million, he said.