Rupert Murdoch? And a social-networking guru? Yesterday's announcement that News Corp. (NYSE: NWS ) is acquiring Intermix (AMEX: MIX ) for $12 a share in an all-cash transaction may have left some observers scratching their heads. It does seem to be an odd pairing at first.
Intermix runs a network of nearly three dozen mostly fledgling websites. But how can that figure into Murdoch's media empire, you ask? Well, a lot easier than you think. See, Intermix's crown jewel is a site called MySpace.com. If you haven't heard about it, ask the first teen you find.
MySpace has taken the social-networking craze pioneered by Friendster and moved it to another level. Many journalists can't help drooling over the popularity of blogs and podcasts, but those innovations on their own are lightweights compared with the multimedia glory of social networking.
Folks set up pages on a site like MySpace.com and begin loading it up with running commentary, audio goodies, and photo galleries. So the sites become part blog, part photo-sharing resource, and -- sort of -- a podcast. Then it gets viral, and I don't mean some contagious malady. We're talking viral in the sense that pages get tied to the pages of friends that you invite over and the pages of virtual strangers who share your interests.
According to Amazon.com's (Nasdaq: AMZN ) Alexa website-ranking service, MySpace is the 26th most trafficked site on the Internet. Momentum watchers should note that Alexa shows the domain's reach more than tripling so far this year.
MySpace is that integral to the Internet experience these days. It's why we've written about Intermix in past issues of the Motley Fool Rule Breakers newsletter service, and it's why the stock was even being considered as a recommendation.
So why is News Corp. interested? Intermix draws 27 million unique monthly visitors to its site network. In one fell swoop, Murdoch's company will be nearly doubling its online audience.
That's important in a time when advertisers continue to earmark money for the Internet. And because Murdoch's Fox channel tends to cater to a younger audience than its rivals do, Intermix makes for a nice match. News Corp. will now have a lively platform on which to market its movies, shows, and other media products while it learns a little more about its core audience.
It certainly beats going out and acquiring a specialty retailer such as Hot Topic (Nasdaq: HOTT ) , Urban Outfitters (Nasdaq: URBN ) , or Abercrombie & Fitch (NYSE: ANF ) to achieve the same end.
Yes, Intermix's profitability has been sparse and spotty. The company also came under fire when it had to settle after being accused of delivering adware to its network visitors. News Corp., though, will help right most of the wrongs. More importantly, Murdoch will savor being the hub of hip -- and he will market accordingly.
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Longtime Fool contributor Rick Munarriz can respect a site on a growth tear. He does not own shares in any of the companies in this story. The Foolhas a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.