Potential Buyers Smell Opportunity with Myspace. Seriously.

Myspace, the nearly forgotten social media site, may have found a buyer.

All Things Digital is reporting that Specific Media, an ad targeting firm, is in the lead for Myspace. Irvine, Calif.-based Specific Media is backed by Francisco Partners.

Golden Gate, a distressed investor that recently inked a deal for California Pizza Kitchen, is also vying for the social network site, the report says. The San Francisco PE firm has never done a social media deal.

The price tag for Myspace? Between $20 million to $30 million, All Things Digital says. A sale could come in the next two days, Thomson Reuters is reporting.

Last week, all the Myspace rumors centered on an investor group that included Activision CEO Bobby Kotick. But Kotick has backed away from the deal over legal concerns, the Wall Street Journal said.

Who else is left for Myspace? Two groups involving Myspace founders. One includes Chris DeWolfe, who is part of a group backed by Austin Ventures, the WSJ said. Tom Anderson is also part of a group that is backed by Criterion Capital Partners, the story says.

In 2005, News Corp. acquired Myspace, a social networking site, for $580 million. Facebook, at that time, hadn’t event bought the Facebook URL and reportedly had a $3.63 million net loss. Myspace has since lost ground to Facebook, which is now believed to be nearing 1 billion users.

News Corp. officially put Myspace up for sale in April. It was seeking $100 million.

Several PE sources have downplayed any investment in Myspace, because the social media site doesn’t offer any value. (One exec today said Golden Gate was crazy for wanting to invest.)

However, others say the company might present opportunity. News Corp has been trying to sell Myspace for some time. “After the success financial buyers had with Skype, there are buyers who think if they buy [Myspace] cheaply enough they might make a big score,” says Reed Phillips, a Desilva + Phillips managing partner.

“You love a motivated, demoralized, get-the-heck-out seller,” another banker says.

One VC said a $30 million offer isn’t that far-fetched  “It depends on what the $30 million is,” the source says. “Is it $30 million cash or something else? It could be linked to performance.”

Myspace, the VC says, is still a large site with a big audience. Other startups are also getting funded at valuations topping $30 million. “In the context of this funding environment, $30 million doesn’t seem that shocking,” the VC says.

Still, the VC conceded that Myspace does have a reputation for being disorganized and not reliable. More than half of Myspace’s 500 person workforce is expected to be laid off once it is sold, Thomson Reuters reported. The real risk, the VC says, is what the buyers intend to do with Myspace and how much more they would need to invest in the company. “So much money has gone into Myspace to fix it as a platform,” the source says.

Specific Media has one of the largest video display networks in the country, the source says. Last year, Specific Media bought BBE, an online video ad provider, for roughly $55 million.  “They’re trying to offer not just display ads but video and other types of ads,” the source says.

Golden Gate, a San Francisco PE firm, is known as a distressed investor. The buyout shop typically invests in retail, restaurants and technology. Earlier this year, Golden Gate announced deals for Lawson Software and Conexant Systems.

Golden Gate declined comment.