News Corp.'s talks to sell Myspace have narrowed to two leading bidders, the ad-targeting firm Specific Media and private-equity firm Golden Gate Capital, according to a person familiar with the matter.
As part of any deal, which could be disclosed as early as Wednesday, Myspace will shed more than half of its staff of about 500 people, the person said.
Under terms of the deals under discussion, the buyer would pay significantly less than the $100 million price for which News Corp. was hoping, with News Corp. retaining a small stake in the social-media site. News Corp., which paid $580 million for the site in 2005, has been rushing to get a deal done this week to be able to book the sale before the end of its fiscal year. News Corp. also owns The Wall Street Journal and FINS.com.
Several other bidders remain in the mix including two groups involving Myspace founders, according to the person familiar with the matter. Chris DeWolfe has been in talks to acquire the site as part of a group backed by Austin Ventures and Tom Anderson has surfaced recently as part of a group backed by Criterion Capital Partners LLC, according to people familiar with the matter.
Specific Media and Golden Gate only recently emerged as front-runners in the bidding for Myspace, which appeared headed to Activision Blizzard Inc. Chief Executive Bobby Kotick. But in recent days, Kotick had backed away from the process over concerns about potential legal liabilities and how much of those liabilities News Corp. was willing to assume, according to other people familiar with the matter.
Founded in 1999 by Tim Vanderhook and his brothers Chris and Russell, Specific Media helps marketers buy digital advertisement across the Internet, online video, mobile and even television. The company got its start by brokering ad space for websites and quickly has moved into the fast-growing business of collecting and using Web browsing, demographic, geographic and other profile information about consumers to target ads. The company now ranks among the largest online-advertising networks in the country, reaching 170.9 million unique U.S. visitors in May, or about 79.0% of the U.S. Internet users, according to comScore Inc.
Specific Media has raised more than $110 million in funding, closing a $100 million round of financing from private-equity firm Francisco Partners in 2007. Since then, the company has acquired a few digital-advertising companies, including online video company Broadband Enterprises and an Amsterdam ad technology company.
Golden Gate, based in San Francisco, has about $9 billion in capital under management. It has been most active in the restaurant and retail sector, recently agreeing to acquire California Pizza Kitchen Inc. for about $470 million in cash. In 2009, the firm was interested in acquiring Playboy Enterprises Inc. but backed out after several months of talks.
The emergence of Specific MediQa and Golden Gate as lead bidders was first reported by All Things D.
Russell Adams and Emily Steel are reporters for The Wall Street Journal, where this story originally appeared. Write to Russell and Emily.
Nick Wingfield and Jessica E. Vascellaro contributed to this article.