Fox Buys PhotoBucket

NEW YORK (AP) – The parent of MySpace is buying the media-sharing site Photobucket for about $300 million, bringing together two of the Internet's most popular hangouts.

The deal announced Wednesday will give MySpace and sister sites under News Corp.'s Fox Interactive Media access to Photobucket Inc.'s photo and video technologies, while Photobucket gets Fox's resources to accelerate development of its tools.

Peter Levinsohn, president of Fox Interactive, said Photobucket also would be able to incorporate advanced slideshow generators and other editing tools from Flektor Inc., which Fox also announced Wednesday it bought.

“Together, they represent a powerful combination and we are thrilled for them to join our network,” Levinsohn said.

Financial terms of the two deals were not disclosed. But three people familiar with the Photobucket deal, citing anonymity because they were not authorized to discuss the price, said Fox was paying about $300 million for Photobucket, about half of the $580 million News Corp. paid in 2005 to buy MySpace.

The Photobucket deal comes just weeks after a public spat in which MySpace partially blocked content from Photobucket. It was announced the same day CBS Corp. said it purchased global online social network for $280 million in cash in a move to attract younger viewers and listeners across its businesses.

MySpace offers a mix of messaging tools to encourage its youth-oriented visitors to expand their circles of friends. Central to the site are personal profile pages where users can post photos and video clips, blast messages to friends and have visitors leave comments.

MySpace users often embed material from outside sites like Photobucket and Google Inc.'s YouTube, both of which make that easy by providing the programming code to cut and paste into MySpace profile pages.

The practice has made Photobucket one of the leading sites on the Internet, even though relatively few access content directly through its home page.

 Under the deal, Photobucket would remain a standalone operation within Fox, and users of rival social-networking sites such as Facebook could continue to incorporate Photobucket content in their profiles. For now, Photobucket will continue to offer basic services for free, with a fee for more storage and other features.

Most noticeable for users will be the acceleration of new editing tools, such as cropping and red-eye removal, Photobucket Chief Executive Alex Welch said. With the resources of a larger company, he said, Photobucket won't be spending much of its time “in a firefighting mode.”

According to Nielsen/NetRatings, the acquisition isn't likely to boost MySpace's audience given the significant overlap already between the two. MySpace alone had 56 million U.S. unique visitors in March, while Photobucket had 15 million. The combined audience would have been 58 million had the combination been in effect then.

But Levinsohn said users don't hang out at two places at once, so the combination still would mean more time spent on Fox properties overall.

And it could give Fox a foothold on sites run by its rivals, especially as Photobucket makes more sponsorship deals of the type that led to a block by MySpace in April. Photobucket had encouraged users to build slideshows promoting Sony Corp.'s “Spider-Man 3,” which MySpace considered a violation of policies banning unauthorized commercial activities.

The block was mysteriously lifted after about two weeks, but both sides had been silent on the details of their peacemaking. Executives from Fox and Photobucket said Wednesday that the acquisition talks were unrelated to that dispute.

Fox's agreements to purchase Photobucket and Flektor represent the latest acquisitions of startups by larger Internet companies. In November, Google bought video-sharing site YouTube for $1.76 billion. The Flektor deal closed Tuesday, while the Photobucket acquisition was signed Tuesday and should close next month.

Flektor's deal represents a coup for that site, which has been open to the public for only a month. Flektor, like Photobucket, will remain a standalone site, but Fox already has concrete plans to incorporate into MySpace its Web-based tools for creating slideshows, video mash-ups and other interactive presentations.

Jason Rubin, Flektor's co-founder, said the deal lets the site grow its audience more quickly than it can alone. So far, he said, the site has fewer than 40,000 users, nearly all through word of mouth.

Shares in News Corp. rose 19 cents, to $23.91, in afternoon trading Wednesday.