NEW YORK – A Web site that enables its users to store photos and video for inclusion in MySpace profiles will become a part of the popular online hangout.
MySpace's parent, News Corp.'s (NWS) Fox Interactive Media, said Wednesday it would acquire Photobucket Inc., just weeks after a public spat in which MySpace partially blocked content from Photobucket.
The block was mysteriously lifted after about two weeks, but both sides had been silent on the details of their peacemaking.
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Fox also separately bought Flektor Inc., which offers Web-based tools for creating slideshows, video mash-ups and other interactive presentations.
"As a leading site for creative expression, Photobucket extends our reach among personal media-sharing enthusiasts, and the innovative new entrant Flektor brings highly differentiated new tools to the table that will drive the next generation," Peter Levinsohn, president of Fox Interactive Media, said in a statement. "Together, they represent a powerful combination and we are thrilled for them to join our network."
Financial terms of the two deals were not disclosed. The Flektor deal closed within the past week, and the Photobucket acquisition is expected to close next month.
The announcement came on the same day CBS Corp. (CBS) said it purchased global online social network Last.fm for $280 million in cash in a move to attract younger viewers and listeners across its businesses.
MySpace, acquired by News Corp. in 2005 for $580 million, offers a mix of messaging tools to encourage its youth-oriented visitors to expand their circles of friends.
Central to it 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 (GOOG) 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 is expected to 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.
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 the Photobucket deal gives MySpace and sister Fox sites access to the technology for integration into their own offerings, while Photobucket gets Fox's financial resources and personnel to continue developing its tools.
The deal also gives Fox any revenues from the types of sponsorship deals that led MySpace to block Photobucket in April.
That block followed MySpace's complaints that the hosting service had been encouraging users to incorporate an ad-supported slideshow into their MySpace profiles. MySpace said the sideshow violated its policies banning unauthorized commercial activities.
Photobucket's chief executive, Alex Welch, responded by accusing MySpace of limiting free expression and treating users as a commodity. He was more conciliatory two weeks later, saying the two had "established open lines of communication and procedures," but he made no mention of any negotiations over a sale of his company.
Fox's agreements to purchase Photobucket and Flektor represent the latest acquisitions of startups by a larger Internet company. In November, Google bought video-sharing site YouTube for $1.76 billion.
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