Summary:

If you want to show you mean action, spending $580 million can get the message across. But News Corp. could have spent a lot more and accomplished a lot less.

newscorp1.gif [Staci D Kramer] If you want to show you mean action, spending $580 million can get the message across. But News Corp. could have spent a lot more and accomplished a lot less with its first major acquisition for Fox Interactive Media. Acquiring MySpace.com and the rest of Intermix not only increases traffic, makes a bold statement and ups the cool quotient; it adds a mix of tools and services including blogs, social networking and personal web pages along with gaming and marketing. In addition, Fox gets a vital music component — one of its most obvious missing pieces.
In many respects, it is the equivalent of the New York Times Company’s acquisition of About.com. For one, FIM swooped in and picked up what looks like one of the top major buys available these days, playing up its new aggressive internet stance and desire to evolve into something more than a collection of sites. For another, when the deal closes in about three months, Fox will nearly double its traffic by adding 27 million-plus unique users for roughly $21.48 a piece.
Ross Levinsohn, just announced Friday as the president of FIM, is running on pure adrenalin at this point. The marathon to complete this deal started at noon Sunday and ended at 4 a.m. today. But he took a few minutes earlier to fill in some of the gaps he couldn’t discuss when we spoke over the weekend. “It had to come together pretty fast,” he said, speaking of the Intermix deal. “There’s obviously a lot of interest in the company, a lot of people were looking at it.”

– “MySpace is clearly the hottest company on the internet, the fastest growing, most dynamic. We think that it fits perfectly with a lot of the demographic that consumes our television and theatrical product.”

– Intermix and MySpace will report to Levinsohn. He plans to keep management intact. In fact, he says the MySpace staff is one of the key assets. “Frankly, they bring an expertise on how to really activate a community and a user base that if you look at their growth it’s astounding. … They’re really a smart bunch and I think they’re going to help lead the whole company into this foray. We’re going to let them continue to run their business. They’re doing a great job. We don’t want to screw it up.

– Intermix has pushed in recent months to clear up its reputation. “All that stuff was related to previous management but they’ve cleaned up,” says Levinsohn. He plans to keep all of the Intermix companies up and running. Grab.com “has grown exceedingly fast and is something we think we can help grow a lot quicker.”
And he sees potential across News Corp. For instance, Alena, described as “an infomercial company on the web,” could be used to pitch fantasy football for foxsports.com, DVDs, DirecTV.

– The deals comes with pitfalls. Some people think MySpace.com may have already jumped the shark, others are waiting for it to follow Friendster.com as the next hot thing to go lukewarm. But Levinsohn isn’t buying that. “That’s something we’ve looked at a lot but I think Friendster never got above a few million users; this thing’s things at 18-plus million and growing. You start to get a network effect where if you’re there and all your friends are there, to move all of them is like switching phone numbers. You get this critical mass and you don’t want to leave because that’s where all your friends are.” He’s not worried about a post-buzz phase. “I believe in the management there. They really know what they’re doing. They have a vision for where this can go and it’s far beyond social networking, there’s a real business there.” Don’t look for a rebranding of MySpace to FoxSpace.

– Levinsohn sees the comparison with About.com and NYTCO. “It brings something that the businesses don’t have. For us, it’s way to prove we’re serious about this business. It’s a way … to talk to a user base that’s right in the sweet spot of our demographic and bring an extra piece that we don’t have. We do a really good job on pure content sites. This is about mining the gold on the Internet of engaging with the users and they do a great job with it.”

This isn’t the last acquisition — given the speed at which they’re moving now I wouldn’t be surprised to see more in the next few weeks — but keep in mind that Fox also has internal development going on. For instance, FIM doesn’t have to acquire an RSS company to move beyond offering a few news feeds. But Levinsohn is also acq-hiring people. “There’s not a lot of ego in terms of invent it here. I want to go out and get the best people and the best companies that can help us really be a player in this business and I think today’s a start.”

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