News Corp. sold Myspace on Wednesday for a fraction of its purchase price, bringing the curtain down on Rupert Murdoch's tie-up with a one-time social networking star that ended up being eclipsed by Facebook.
Myspace, which was bought by News Corp. in 2005 for $580 million, was bought by Specific Media, a digital ad-targeting platform, which said financial terms were confidential.
The News Corp.-owned technology blog All Things Digital put the purchase price at $35 million, however, and said the deal includes slashing about half of Myspace's staff of between 400 and 500 people.
"Myspace is a recognized leader that has pioneered the social media space," Tim Vanderhook, chief executive of Irvine, California-based Specific Media said in a statement.
"The company has transformed the ways in which audiences discover, consume and engage with content online," Vanderhook said. "We look forward to combining our platforms to drive the next generation of digital innovation."
Vanderhook said News. Corp. would take a minority equity stake in Specific Media as part of the deal. According to All Things Digital, News Corp. will retain a five to 10 percent stake in Myspace.
Myspace, which was launched in 2003, was the leading social networking site on the Internet when it was bought by News Corp. six years ago but it has been losing members to Facebook for years.
According to tracking firm comScore, Myspace had 21.8 million unique monthly US visitors in August 2005 to Facebook's 8.3 million.
Facebook surpassed Myspace in the number of US visitors in May 2009 and has just kept adding users since then while Myspace's membership eroded, according to comScore.
In May, Facebook had 157.2 million unique monthly US visitors compared to Myspace's 34.9 million, comScore said. Facebook, which was launched in 2004, has nearly 700 million members worldwide.
Myspace chief executive Mike Jones, in a memo to company employees obtained by Silicon Valley technology blogs, said he would leave Myspace in two months after helping Specific Media with the transition.
"While I regret we won't be working together at Myspace any longer, I am very proud of the work we have done here and believe we have performed with excellence -- even under extremely difficult circumstances," Jones said.
Myspace has gone through a series of layoffs, chief executives and makeovers in recent years as News Corp. sought to cut losses at the site and reverse the decline in membership.
As its popularity waned, Myspace has been seeking to reinvent itself recently as a destination for music fans.
Lee Brenner, a former Myspace employee, said Wednesday in a blog post that Myspace's slide was probably the result of a number of factors.
"I'm sure most employees (former or current) will argue that it was poor management, or a need to hit revenue targets once News Corp. took over, or a bottleneck in the technology department, or lack of resources given to their division, or a poor public relations effort, etc., that set the course of MySpace's downfall," Brenner said.
"It is most likely a combination of these factors, along with a 'low attention span' public," said Brenner, writing at a site he co-founded called Hypervocal.
"It probably didn't help to be doing business, and trying to grow, along with all of these issues, in the midst of a global economic crisis," said Brenner, who was Myspace's executive producer of political programming from 2007 to 2009.
News Corp. chief operating officer Chase Carey put Myspace on notice in November saying the losses at the social network were "unsustainable" and the news and entertainment giant formally put Myspace up for sale in January.
News Corp. was reportedly seeking $100 million for the site.
According to the News Corp.-owned Wall Street Journal there were two leading bidders for Myspace -- Specific Media, the eventual buyer, and private equity firm Golden Gate Capital.
News Corp. does not break out results for Myspace in its earnings but the "other" segment, which includes the social network, reported a second quarter operating loss of $156 million, $31 million wider than a year earlier.
News Corp. shares gained 1.25 percent on Wall Street on Wednesday to close at $17.39
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