Will "MYSPACE" make a comeback…?

My Space has just been sold, for 35 million down from 580 million six years ago…..will they make a comeback…? Another example of social media marketing and company’s trying to compete with Facebook.     Vincent Gentile: avminternetsolutions.com

News Corp. sold music and entertainment website Myspace to a little-known ad-targeting firm, shedding a onetime Internet success whose steady slide had been a distraction at the media conglomerate for years.

Specific Media LLC, which emerged as a front-runner for the site only in recent days, will pay $35 million in cash and stock for the site, according to people familiar with the matter, a major comedown for a property that was acquired for $580 million just six years ago.

Whether the new owner can turn around Myspace’s performance remains to be seen. Specific Media, which sells ads on other websites, said it was teaming up with actor and pop star Justin Timberlake to “rebuild and reinvigorate” Myspace by making it a place to consume media and connect with entertainers, a strategy several rounds of Myspace managers have pursued unsuccessfully for years. Mr. Timberlake invested an undisclosed amount in the company.

Myspace gives Specific Media its own real estate for selling ads and a trove of data to use to target those ads. Myspace, which had 34.9 million unique U.S. users in May, according to comScore, has some of the richest consumer data on the Internet via its user profiles. Specific Media also said that it plans to develop “socially activated” advertising campaigns that let users share favorite ads with their friends.

Specific Media CEO Tim Vanderhook said in an interview that the company aims to build a “digital media company on par with Yahoo, AOL, Facebook and all the other big names out there.”

Specific Media has floated the idea of going public in discussions with industry executives, according to a person familiar with the matter, and Myspace could boost its value through exposure to the consumer Internet industry, which is red hot with investors. Mr. Vanderhook said the company would look at a public offering if the integration of the two companies was successful.

In conjunction with the sale, Myspace slashed its work force yet again, laying off more than half of its roughly 450 employees Wednesday. As recently as two years ago its staff numbered 1,400. Its CEO, Mike Jones—who had made his own bid for the site—stepped down, although he’ll stay on for a transition period and may join the board.

The deal ends a saga that took News Corp. hunting for bidders across continents and into talks with personalities as varied as the owner of Penthouse magazine to each of its pushed-aside founders, Chris DeWolfe and Tom Anderson.

Ultimately, continued declines in traffic, which surprised even some News Corp. executives, limited the media giant’s options, people familiar with the matter said.

Many would-be bidders were spooked by Myspace’s deterioration, including a projected loss of $165 million for the year ending June 30, according to other people familiar with the matter. Various labor, real-estate and music-licensing costs struck some bidders as untenable. News Corp. executives lowered their expectations and focused on pursuing deals they could wrap up by their end-of-June deadline, the people said.

Just before Memorial Day, tensions were running high as bids were coming in lower than the $100 million the company had once hoped to receive. News Corp.’s executive vice president of operations, Jack Kennedy, and Mr. Jones, Myspace’s chief executive, continued reaching out to a range of parties. They urged them to consider any deal that they could complete by the end of June, the end of News Corp.’s fiscal year, even if it were only for some of the company’s assets, these people said.

News Corp. will retain a less than 5% stake in the site, according to people familiar with the matter.

The deal is a relief for News Corp. and its chief operating officer Chase Carey, who has been frustrated with Myspace’s woes and has made fixing the site, and later disposing of it, priorities since he rejoined the company in 2009, according to other people familiar with the matter.

But it also illustrates how far Myspace has fallen and the opportunities it missed as younger Internet companies, including coupon site Groupon Inc. and Zynga Inc., a gaming site, prepare public offerings that would value them in the tens of billions of dollars.

Myspace allows people to create personal profiles and suggests music and other media for them to consume based on their interests.

Shares of rival Facebook Inc. have recently traded on private-company exchanges at prices that value the company at $70 billion to $80 billion.

News Corp. shares rose 1.3%, or 22 cents, Wednesday on the Nasdaq stock market to $17.39. News Corp. also owns The Wall Street Journal.

Specific Media entered the bidding process months ago but wasn’t a front runner until the last couple of days, according to one of the people familiar with the matter.

Mr. Vanderhook said in an interview that he and his brothers who co-founded Specific Media have long coveted Myspace and jumped at the opportunity to acquire the site when it was put on the block last winter. He said that he thinks Specific Media can succeed where others have failed in large part because of the “credibility” that Mr. Timberlake, whom they finalized a deal with earlier this week, brings to the company.

“We have one of the most creative people driving the creative strategy. That’s a huge difference than what was done in the past,” he said.

The sale also illustrates how dramatically News Corp. has reversed its digital strategy in recent years as competition from tech companies has intensified. Several years ago, the conglomerate aimed to bulk up its online audience with a frenzy of deals.

It bought Myspace’s parent company Intermix Media in 2005 for $580 million, outmaneuvering Viacom Inc. and others. Some investors and rivals balked at the price, which was around 150 times the fledging site’s earnings. Then it purchased online gaming company IGN Entertainment in 2005 and photo-sharing site Photobucket in 2007, among others.

It shed several of those properties as they were eclipsed by faster-moving rivals. Instead, it started to focus on building out the digital arms of its core TV and newspaper businesses.

Myspace remained a drag, however. Once the most popular social networking site in the U.S., Myspace was leapfrogged by Facebook Inc. as the site struggled to focus and recruit strong technical talent, Myspace executives have said.

News Corp. started dropping hints it wanted to ditch Myspace last year. In November, Mr. Carey, News Corp.’s COO, called losses unsustainable. In February, Mr. Carey said “the plan to allow Myspace to reach its full potential may be best achieved under a new owner.”

The media company tapped investment bank Allen & Co., which struck up conservations with potential buyers ranging from fledging start-ups to Demand Media Inc. to Penthouse owner FriendFinder Networks Inc., which owns dating sites such as the risqué AdultFriendFinder.com.

In February, News Corp. selected a handful of companies to examine the financials. Bidders went back and forth with a team of Allen bankers to better understand the risks involved.

Talks progressed with a group of investors that included Activision Blizzard Inc. CEO Bobby Kotick, a friend of Mr. DeWolfe who was familiar with the site. But earlier this month, talks broke down amid the group’s concerns over potential legal liabilities, according to people familiar with the situation.

By JESSICA E. VASCELLARO, EMILY STEEL and RUSSELL ADAMS

Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com, Emily Steel at emily.steel@wsj.com and Russell Adams at russell.adams@wsj.com

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