Ailing MySpace May Be Sold -- Perhaps To Google

With 500 jobs cut, a MySpace sale is possible, News Corp. has confirmed. And Google could be a buyer of MySpace, which News Corp. bought in 2005 for $580 million. Google already powers searches on MySpace and provides advertising services. Despite recent revamps, MySpace hasn't been able to regain its former market dominance.

AOL, Yahoo, MySpace. All three are one-time Internet superstars that lost their glimmer as competitors emerged. AOL continues to reorganize. Yahoo is shuttering services. And MySpace may be selling itself.
MySpace this week announced plans to lay off about half its employees. In the wake of the terminations -- about 500 are leaving the company -- MySpace CEO Mike Jones tried to position the move in a positive light.
It didn't work. The rumor mill immediately started churning about who would buy MySpace. Then MySpace confirmed that a sale is a possibility.
"News Corp. is assessing a number of possibilities, including a sale, a merger, and a spinout," Rosabel Tao, a spokesperson for MySpace, told Bloomberg. "The process has just started."
Google a Suitor?
News Corp. bought MySpace in 2005 for $580 million. How much News Corp. could sell what's left of the assets is speculative. There has been talk about spinning MySpace off as a private company and selling stock options to employees, but without strong management the company seems unlikely to pull out of its rut. Google is one name that has been thrown around in acquisition talks.
"The News Corp. CFO had implied that it might sell MySpace a few months ago. At the right price there would be buyers, including Google, potentially," said Greg Sterling, principal analyst at Sterling Market Intelligence. "Google was a potential buyer of MySpace the first time, but balked at the price tag. But there might be a fire sale now. The brand has been damaged and has lost much of its cool. But strong management might be able to resuscitate it."
Google couldn't immediately be reached for comment, but there are ties between MySpace and Google. The two companies in December announced a multiyear agreement to renew and expand their search and advertising relationship. Under the terms of the agreement, Google will continue to power MySpace search and search advertising and will also provide additional display advertising services to leverage the entertainment content. Clearly, Google sees some value in the site.
MySpace's at Bats
MySpace has been trying to turn itself around and repositioned itself in October. MySpace announced a new brand, web site, and a suite of products aimed at Gen Y. The goal was to create a destination heavy on personalization where this age group could discover content and connect with fans who share similar interests. The new entertainment-focused MySpace spans music, celebrities, movies, television and games.
In November, MySpace announced a new feature that lets its members port over their lives and interests. That means a MySpace user's Facebook stream gets populated with entertainment content according to their preferences. MySpace members can also program their own streams based on recommendations and trending topics on MySpace and engage with fans who have similar interests.
And in December, MySpace Music and Fuse, Madison Square Garden's national music television network, worked together on a music program to showcase emerging artists. Dubbed "Introducing ...", the program worked to position MySpace as a place to find new artists.
Much like Yahoo, however, MySpace hasn't been able to find a way to claw back to its dominance. It's unclear if a merger or acquisition would end MySpace's struggles, or just present new problems for the acquiring company.