Update: MySpace Sale Rolling To Conclusion; Cutting Staff By More Than Half

Several parties are still negotiating to buy all or part of MySpace (NSDQ: NWS), building to a possible conclusion before News Corp.’s fiscal quarter closes at the end of the week. At the same time, MySpace is slashing costs with yet another major staff cut: paidContent has learned that likely more than half of the remaining 500 employees will be laid off Wednesday, far higher than earlier reports.

We understand separate investor groups comprising MySpace co-founders Tom De Wolfe and Tom Anderson remain interested, along with Bebo owner Criterion Capital Partners. AllThingsD fingers a duo of the ad network Specific Media and private equity firm Golden Gate Capital as frontrunners, with a price of $20 to $30 million.

But paidContent understands the price may be higher, comprising both cash and stock options, and Fortune blogger Dan Primack expresses a different view about the leading candidate…


Despite recently cutting nearly half of its staff, MySpace is due to cut another 150 of its 400 remaining staff to trim extra fat for the sale, Techcrunch says.

No matter the price fetched, it will be significantly lower than the $580 million News Corp paid in 2005. Still, News Corp has made money from MySpace – revenue went from $1 million a month to $500 million a year within two years of the acquisition, former Fox Interactive Media chief Ross Levinsohn told paidContent this month. And, while Google (NSDQ: GOOG) ended the $900 million deal that gave News Corp. cover for the acquisition cost, the search engine paid out the bulk of it.

A buy of MySpace, the content network, by Specific Media, the ad network, may be seen in the same bracket as Adconion’s 2009 buy of Joost, which it did in order to buy an audience and content against which to sell to advertisers.

With even fewer staff, such a new owner may be able to wring enough advertising income out of MySpace to satisfy itself. But where it would leave MySpace’s ongoing product remains to be seen.

MySpace had 1,420 employees in June 2009; a nearly 30 percent cut took it to about 1,000. Six months ago, the staff was nearly halved.