MySpace Sells for $35M: Report
According to reports, MySpace has been sold by News Corp to advertising network Specific Media for an estimated $35 million. The total sum is apparently a mix of stock and cash, with News Corp holding on to about 5 per cent of MySpace.
Unfortunately for MySpace staff, the move won't be a happy one.
The deal between News Corp and Specific Media is reportedly contingent on MySpace cutting half of its 400 staff members, meaning that layoffs should come down hard by the end of this week. It's likely MySpace management, like CEO Mike Jones, will stay on for an interim period to help with the transition of ownership.
The Fall of a Social Network Giant
For its part, Specific Media says it's excited about the purchase.
"There are many synergies between our companies as we are both focused on enhancing digital media experiences by fuelling connections with relevance and interest," said Specific Media CEO Tim Vanderhook.
"We look forward to combining our platforms to drive the next generation of digital innovation." (Source: pcmag.com)
The sale price puts an exclamation point on MySpace's epic decline in popularity since 2005 -- roughly the point when Facebook's membership started shooting skyward.
News Corp Loses an Estimated $1 Billion on MySpace
Six years ago News Corp purchased MySpace for $580 million -- far more than it sold for today. At one point MySpace was considered so valuable that Viacom CEO Tom Freston was fired for failing to grab up the social network before News Corp. (Source: csmonitor.com)
Anders Bylund of Ars Technica, estimates that News Corp (owned by Rupert Murdoch -- one of the most wealthiest men in the world), lost approximately $1.3 Billion dollars on the MySpace deal.
"All things considered, MySpace has cost Murdoch's empire something like $1.3 billion," Bylund writes. "Even if my assumptions are way off, the final cost can't be less than $1 billion." (Source: arstechnica.com)
The MySpace experiment hasn't been a total waste for News Corp, however, which made back some of its investment through a bountiful ad deal with Google.
MySpace's Future Unknown
It's not yet known what Specific Media will do with MySpace.
Given that it's one of the world's largest advertising networks, it's not out of the question to imagine them using member information to craft better ads. It's certain this was never the intention for the network when it was first launched in 2003.