Fox Interactive Nears Deal to Buy Photobucket

Photobucket, a four-year-old, rapidly growing Web company, is in advanced talks to be acquired by Fox Interactive Media, a division of the News Corporation, a person briefed on the negotiations said Monday.

Photobucket allows its users to store photos and videos and then easily drop them into their pages on prominent sites like Facebook, eBay and particularly MySpace, which is also owned by the News Corporation.

The deal is not yet complete, but the parties have ironed out major issues and are focusing on finer points, according to this person, who said the price could be as high as $300 million. The person asked not to be further identified because of the sensitivity of the talks.

Representatives of MySpace, Fox Interactive Media and Photobucket all declined to comment.

News of the discussions was first reported earlier Monday on a Silicon Valley blog, Valleywag. Photobucket said last month that it had hired Lehman Brothers to explore a possible sale of the company.

Photobucket, which has offices in Denver and San Francisco, has catapulted over older sites to become the largest and fastest-growing photo-sharing service on the Web. Unlike rival photo sites such as Kodak Gallery, Shutterfly and Flickr, which is owned by Yahoo, Photobucket positioned itself as a tool for people using sites like MySpace, rather than a place to get prints made or to interact with other photographers.

The company has had the kind of booming growth that make larger media companies envious. A year ago, it said it had 14 million members. On its Web site on Monday, Photobucket cited 41 million users.

The site is free for basic use, but charges $25 a year for a premium subscription that includes extra storage space and the ability to store videos more than five minutes long. It also displays advertisements to users when they manage their accounts.

The company already has a symbiotic, if sensitive, relationship with MySpace. According to the research firm Hitwise, for the week ended Saturday, 60 percent of Photobucket traffic came from MySpace users who had placed their photos and videos on Photobucket. It was also the third-largest destination for people leaving MySpace, after Google and Yahoo.

“There’s clearly a synergy between these two sites,” says Bill Tancer, general manager of global research at Hitwise.

That close relationship has made MySpace uncomfortable in the past.

Last month, MySpace blocked slide shows and videos stored on Photobucket, saying the company was violating its terms of service by embedding its own advertisements in the media files. After a week of discussions, the two companies resolved their differences and MySpace removed the block.