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News Corp. To Buy MySpace-Owning Intermix Media

July 18, 2005

Rupert Murdoch today further expanded his tentacles throughout the social media market.�

News Corp., headed by media giant Murdoch, today said it would buy Intermix Media Inc., owner of the popular MySpace.com social networking site. The acquisition is going for $580 million cash in a move to expand the media conglomerate’s Internet offerings.

News Corp. will pay $12 a share, a 12 percent premium over Intermix’s closing price on the American Stock Exchange on Friday. The News Corp. deal is expected to close in the fourth quarter of calendar 2005.

The deal comes after News Corp., home to the Fox television network, Fox News and 20th Century Fox film studios, announced at the end of last week the creation of an Internet division to capture a share of the surge in Internet advertising, by holding the company’s sports, news and entertainment sites. (Editor’s Note: “News” and “entertainment” are synonymous in Fox’s case. Whoosh!)

Intermix, which had $24.1 million in revenue in its fiscal fourth quarter, will become part of News Corp.’s newly created Fox Interactive Media.

News Corp. said last Friday that it plans to make strategic investments in this area. The creation of the Internet unit comes three months after News Corp. CEO Rupert Murdoch’s exhortation to the newspaper industry that it was too slow to respond to the Internet.

The acquisition gives Murdoch’s News Corp. the Website MySpace.com, described as a leading “lifestyle portal.” MySpace.com is a site wherein people — often of a certain age group and disposition — network for friends, relationships and, sometimes, business. (Mostly, from my experience in knowing others who belong, members are seeking new music and sexy pictures of other members, slowly building up their profile of “friends.” Also, it’s a place for unknown bands and companies to promote themselves and concerts and events. It’s also an outlet for angsty and indie teenagers to “publish” their bad poetry in blogs and drop obscure band names in their profile of interests.)

Myspace.com ranks as the No. 5 Web site based on page-views, according to Internet-rating service comScore Media Metrix. The two-year-old site allows people to create journals/blogs, and then share their entries with others to create an online social network.�

As part of the deal, Intermix exercised its option to acquire the 47 percent of MySpace.com that it does not already own.

MySpace.com and Intermix’s more than 30 sites will become part News Corp.’s newly formed Fox Interactive Media unit. And the acquisition, according to company officials, “underscores News Corporation’s commitment to expand its Internet presence by offering a deeper, richer online experience for its millions of users.” At the core of the purchase is the importance of online advertising for traditional media companies. Web-based marketing is expected to rise 15 percent this year, the biggest jump among all forms of media, compared with a two percent increase for the top TV networks.

With the deal, News Corporation’s U.S. Web traffic will nearly double to more than 45 million unique monthly users. Intermix attracts about 27 million users to its sites specializing in entertainment, humor, gaming and social networking, as well as sharing or sampling of pictures, music and video.

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DRB



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