MySpace and News Corp. Eye Flixster (But for What?)

[UPDATED]

Now that the digital equivalent of a super-vac, MySpace CEO Owen Van Natta, has sucked up some decent music start-ups–Imeem and iLike–for a song, to bolster the social networking site’s efforts to expand into an entertainment portal, what’s next?

According to several sources, the News Corp. (NWS) unit has turned its omnivorous attentions to Flixster, the popular social networking site for movies.

Whether this is an acquisition or more of a larger partnership deal with News Corp. digital entertainment sites is unclear. Several sources said a purchase was a possibility, while others talked about a more complex deal that did not necessarily mean a purchase.

Sources said any such deal is not imminent, but that News Corp. itself has been conducting extensive due diligence on the San Francisco-based Flixster, part of a plan to combine it with Rotten Tomatoes, another News Corp.-owned site run by its IGN Entertainment division.

Rotten Tomatoes features mostly premium content, including professional reviews, trailer videos and news. It has community feature that is just in beta, so it would be a nice fit with Flixster.

A MySpace spokeswoman declined to comment at the moment.

In 2007, the start-up was close to being acquired by IAC/InteractiveCorp (IACI) for $100 million, several sources said. But the deal went south when CEO Barry Diller changed his mind at the last minute.

Founded in 2006 by CEO Joe Greenstein and CTO Saran Chari, Flixster has raised $7 million in funding from Lightspeed Venture Partners and Pinnacle Ventures, as well as garnering an angel investment from Silicon Valley entrepreneur and LinkedIn founder Reid Hoffman.

Flixster has attracted a huge audience–upward of 50 million–who trade all kinds of recommendations, ratings, news and even post user-generated movie reviews on its Web site and via widgets on social networking sites, mostly on Facebook.

While Amazon (AMZN) unit IMDb (Internet Movie Database) is still larger in terms of traffic, the more innovative Flixster has been growing much faster and is more social, which makes it attractive to MySpace, sources said.

More important is the mobile growth. Flixster is the No. 1 movie app on Apple’s (AAPL) iPhone and leads on other smartphones too.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)