Murdoch in search of online deals

Rupert Murdoch is looking for deals beyond his $5bn offer for Dow Jones, people familiar with his plans said.

He is seeking internet acquisitions or a deal involving the MySpace social networking site to increase his stake in the booming online advertising sector, they say.

Mr Murdoch has made a series of moves this month to build News Corp’s war chest, putting non-core assets such as its smaller US television stations up for sale and reviewing its outdoor advertising business in Russia and eastern Europe.

Analysts estimate that the moves could bring in up to $5bn in cash for further deals.

“Rupert has a shopping list. Dow Jones is at the top of it, but it’s not the end of the list,” said one person familiar with Mr Murdoch’s plans.

Mr Murdoch has built his News Corp media business through numerous acquisitions.

Following a deal with John Malone’s Liberty Media to swap News Corp’s stake in DirecTV for News Corp voting shares, he will control about 40 per cent of News Corp’s voting power later this year.

“That increased ownership concentration raises the potential for transactions,” said Michael Morris, analyst at UBS.

Mr Murdoch bought MySpace for $580m, and has already recouped his investment through a search deal with Google worth $900m and amid strong revenue growth.

People familiar with MySpace say Mr Murdoch believes that despite the social networking site’s success, it is not able to make as much money from its non-search online inventory as companies such as Yahoo and AOL. This is partly because it does not own systems that match online inventory with ads.

Yahoo, the internet portal, has long been seen as a potential News Corp partner.

Mr Murdoch and Peter Chernin, his number two, have in recent months had informal talks with Terry Semel about swapping MySpace for a stake in Yahoo of up to 25 per cent, people familiar with the talks said.

The discussions never developed into negotiations, and due to the shake-up at Yahoo which this week led to the ousting of Mr Semel, it is not clear if Jerry Yang, his successor, wants to consider a deal.

“We would love to see News Corp monetise MySpace at north of $10bn tax-free for a 25 per cent stake in Yahoo,” said Richard Greenfield, analyst at Pali Research, adding that a newly merged Yahoo/MySpace should buy rival site Facebook.

News Corp is potentially considering other acquisitions, following deals such as Microsoft’s $6bn purchase of Aquantive and Google’s $3.1bn deal for DoubleClick. The biggest potential targets in the US include Quepasa and Valueclick, according to UBS research.