MySpace to acquire Photobucket

Rupert Murdoch watched Google snatch YouTube, but he's not letting Photobucket get away.

Social-networking site MySpace, owned by Murdoch's News Corp., has agreed to acquire Photobucket, the Web's No. 1 photo-sharing service, according to a source close to the deal.

The source, who requested anonymity because he isn't authorized to discuss the deal publicly, confirmed a story about the acquisition in the blog Valleywag on Monday. Before the deal is announced, the two sides must wrap up a few details, the source said. Financial terms weren't available, but it is widely known that Photobucket, with 40 million registered users, has been shopping itself in recent months and asking for about $300 million.

Representatives from both companies did not respond to interview requests.

The deal comes just a month after the two companies crossed swords in a very public public-relations battle. MySpace accused Photobucket of violating its terms of agreement by "encouraging" users to include advertisements in the slide shows they posted to MySpace. Photobucket said that without notice, MySpace began blocking the image-sharing site's photo slide shows and videos.