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June 29, 2011 6:56 PM

Hogan Lovells Helps News Corp. Unload MySpace for $35 Million

Posted by Brian Baxter

Six years after News Corporation bought MySpace for $580 million, the media giant is divesting itself of the struggling online social network through a $35 million sale to targeted advertising company Specific Media.

Most of the Beverly Hills-based company's 400 employees will be dismissed following the change in ownership, according to an e-mail sent out on Wednesday by MySpace CEO Mike Jones confirming the deal.

Helping New York-based News Corp. sever its ties to MySpace was longtime outside counsel Hogan Lovells. Earlier this year the firm advised News Corp. on its $674 million acquisition of television production company Shine Group, a company founded in 2001 by Elisabeth Murdoch, the daughter of News Corp. chairman and CEO Rupert Murdoch.

Leading the Hogan team on the MySpace sale are M&A partners Alexander Johnson and Maureen Hanlon, tax partner Philip Altman, employee benefits partners Joseph Rackman and Carin Carithers, IP partner Audrey Reed, and data privacy partner Lynda Marshall.

Johnson joined predecessor firm Hogan & Hartson from Skadden, Arps, Slate, Meagher & Flom in 2005. It was Skadden that advised News Corp. on its $580 million acquisition of former MySpace parent Intermix Media that same year; Hogan did some tax work on the deal. Johnson says he was pleased to handle the disposition of MySpace this time around.

"There was certainly a lot of interest in MySpace, it wasn't a distressed property by any means," Johnson says. "MySpace still has tens of millions of users and is a relatively marquee brand on the Internet despite it falling out of favor relative to Facebook."

News Corp. deputy general counsel Michael Bunder led an in-house team at the company working closely on the deal with MySpace general counsel Lin Cherry. (News Corp.'s longtime general counsel, Lawrence "Lon" Jacobs, resigned earlier this month to focus on philanthropic work in the wake of a phone-hacking settlement with actress Sienna Miller, according to sibling publication Corporate Counsel.)

Specific Media turned to Gibson, Dunn & Crutcher to handle the MySpace acquisition. Terrence Allen, a corporate partner in the firm's Irvine, Calif., office, led a team advising the Irvine-based company on the deal. In March the Specific Media named former Gibson Dunn corporate associate Drew Bordages as its new general counsel. (Gibson Dunn handled an important Internet privacy case for Specific Media that a federal judge in California dismissed last month.)

As part of Specific Media's acquisition agreement for MySpace, News Corp. will retain a minority stake in the company that was once the centerpiece of its interactive media division. Also taking a stake in MySpace is pop music star and actor Justin Timberlake.

Gerald Schwartz, cochair of the advertising, marketing, and promotions practice at New York's Davis & Gilbert, advised Specific Media on the deal with Timberlake. Issues related to music licensing were handled by Davis & Gilbert entertainment, digital media, and technology partner Richard Eisert.

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