News Corp says looking at spinout or sale of MySpace

An undated image courtesy of MySpace. REUTERS/Handout

SAN FRANCISCO (Reuters) - News Corp is exploring strategic options for its MySpace Web site including a sale or a spinout, the company said on Wednesday, a day after the former social networking high-flyer slashed nearly half of its staff.

News Corp, which paid $580 million for MySpace in 2005, believes a spinout would be the most logical route, a source familiar with the matter told Reuters. That option would likely entail someone from the venture capital or the private equity community investing in MySpace, thereby altering the current ownership structure, the person said.

The company launched a new version of the site in October centered on music, movies and entertainment for the 35-year-old-and-under crowd.

At an all-staff meeting on Wednesday, MySpace CEO Mike Jones announced that parent-company News Corp was exploring strategic options for the site, News Corp spokeswoman Julie Henderson confirmed on Wednesday. The news was first reported by Bloomberg.

“We are looking at a number of strategic options for the business, including a sale, merger or spinout,” said Henderson.

News Corp Chief Operating Officer Chase Carey told Reuters in November that the company was exploring all options for MySpace, including a sale, and told investors that month that MySpace had quarters rather than years to turn itself around.

Once the top Internet social networking site, MySpace has been eclipsed in recent years by Facebook, which now counts more than 500 million users and was recently valued at $50 billion.

On Tuesday, MySpace announced that it was laying off 47 percent of its staff, or about 500 employees.

Reporting by Alexei Oreskovic; editing by Carol Bishopric