News Corp. To Buy Intermix For $580 Million

by Gavin O'Malley, Jul 19, 2005, 6:01 AM

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In another example of a traditional media company snapping up an Internet player, Rupert Murdoch's News Corp. on Monday agreed to buy Intermix Media Inc., which controls the wildly popular social networking Web site MySpace, for $580 million in cash.

MySpace, along with Intermix's other 30-odd Web destinations, has made inroads in drawing both the precious youth market and advertisers. Nielsen//NetRatings' AdRelevance unit reported last week that MySpace beat out heavyweights MSN Hotmail and Yahoo! Mail as the leading site for advertisers to promote their wares in June, with a 7.9 percent share of ad impressions. Advertisers include Procter & Gamble and Sony Pictures.

Additionally, MySpace.com currently dominates other social-networking sites on the Web, with 84.46 percent of the market for the week ending May 21, according to research firm Hitwise.

The deal represents one of many recent buyouts of Internet companies by traditional media players. For instance, earlier this year, Dow Jones & Co. purchased MarketWatch for $519 million, and New York Times Co. bought About.com from Primedia for $410 million.

Intermix, which said it had exercised its option to buy the 47 percent of MySpace.com it doesn't already own, will become part of News Corp.'s new Fox Interactive Media unit. The addition of Intermix's 27 million monthly users will more than double Fox Interactive's online audience.

Richard Rosenblatt, Intermix Media's chief executive officer, and Chris DeWolfe, chief executive officer of MySpace.com, will retain their jobs when the acquisition is completed. A company representative said MySpace had no plans to change under new management.

"MySpace will continue to create new ways to connect people online and to maintain a unique environment where our users can creatively express themselves," a spokeswoman said in a statement. "With this acquisition, MySpace will be able to accelerate its growth plans and expand into new markets."

In April, Intermix became the target of New York Attorney General Eliot Spitzer and his quest to curb spyware. Spitzer sued Intermix for spreading ad-serving programs without consumers' consent, along with the games and screensavers available on its sites. Intermix said it had stopped distributing programs mentioned in the lawsuit, but in June agreed to pay just over $7 million to settle the charges without admitting any wrongdoing.

Intermix may be News Corp.'s latest foray online, but it's not its first. In fact, News Corp. was the first major media company to make a big online investment. In 1993, it acquired Delphi Internet Services Corp., one of the world's first consumer Internet service providers. But News Corp. failed to formulate an integrated online strategy, squandering the opportunity as Delphi was passed by other emerging online services such as America Online, CompuServe, and Prodigy.

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