MySpace 'will sell for at least $100m'
News Corporation is turning the MySpace sale process into a drawn out “dog race”, in an attempt to get as much money as possible for the ailing social network, according to sources close to the deal.
MySpace has not managed to compete with Facebook. Photo: AFP
Contrary to earlier reports that the media giant was unable to achieve its asking price of $100m, a source close to the acquisition process told The Telegraph, that News Corporation would definitely get $100m for MySpace, if not more and has deliberately dragged its feet and revealed very few company financials in order to achieve the highest figure.
“News Corporation has been biding its time in order to get as much money as possible for the asset. It will easily achieve the $100m price tag if not more.
“The interested parties, of which there are more than have been reported, are at the due diligence stage and have only in the last week been allowed to see under the hood of MySpace’s figures and business activities. Until now, News Corporation has deliberately restricted information in order to get the price and interest up as high as possible. It’s turned into a dog race between the front runners,” the source said.
News Corporation is expected to sell the asset by or on June 30, 2011, in time for the end of its financial year. However, sources familiar with the deal process expect the procedure to run until “the very last minute”.
Front runners are believed to include: an investor group led by Bobby Kotick, the chief executive of games company Activision Blizzard, Criterion Capital Partners – the private equity company which bought Bebo from AOL last year and social networking site myYearbook.
News Corporation is understood to want to retain a small percentage of the company, while handing over operational control and majority ownership to the successful buyer.
A second source, also close to the purchase process, told The Telegraph, that there was still money to be made from advertising via the struggling social network.
“The site still has 40 million active users worldwide. There is definitely still money to be made from better advertising around an improved product. News Corporation just stopped investing in MySpace at a crucial time,” they said.
“Lots of companies spend millions trying to attract one million users which they can monetise through adverts. MySpace still has a good audience compared to other sites online – just not compared to Facebook.”
MySpace declined to comment.
News Corporation bought MySpace for $580m (£373m) in 2008. The asset was briefly valued at $12bn when News Corp attempted to merge it with Yahoo in 2007.
However, it users and value have dropped significantly in the last three years, having failed to compete successfully with Facebook.
MySpace now attracts fewer than three million monthly users in the UK, while 30 million UK web users have a Facebook profile which they regularly check.
Earlier this year, MySpace shut down the majority of its international operation, sacking 500 people.
At the end of last year, Chase Carey’s, News Corporation’s chief operating officer, made disparaging comments about the former darling of the social networking space.
He described the site as a “problem” and said that a sale or partnership with internet giants such as Yahoo or AOL were two or a number of options under consideration.
Mr Carey, who has previously described MySpace’s losses as “neither acceptable or sustainable”, refused to set a deadline for the social networking site to return to profitability before it push ahead with a sale. “I’m not going to break down [the number of] quarters,” he said. “It’s not years ... we need to deal with this with urgency.”
According to a digital executive close to the company: “MySpace lost $100 million in the first quarter last year. To get it back on track is going to require a massive investment – one which News Corporation it not prepared to make. It has many other priorities to put its money into. So instead, it has been taking costs out of the business while it's still in its hands.”
A second source, also close to the purchase process, told The Telegraph, that there was still money to be made from advertising via the struggling social network.
“The site still has 40 million active users worldwide. There is definitely still money to be made from better advertising around an improved product. News Corporation just stopped investing in MySpace at a crucial time,” they said.
“Lots of companies spend millions trying to attract one million users which they can monetise through adverts. MySpace still has a good audience compared to other sites online – just not compared to Facebook.”
MySpace declined to comment.
News Corporation bought MySpace for $580m (£373m) in 2008. The asset was briefly valued at $12bn when News Corp attempted to merge it with Yahoo in 2007.
However, it users and value have dropped significantly in the last three years, having failed to compete successfully with Facebook.
MySpace now attracts fewer than three million monthly users in the UK, while 30 million UK web users have a Facebook profile which they regularly check.
Earlier this year, MySpace shut down the majority of its international operation, sacking 500 people.
At the end of last year, Chase Carey’s, News Corporation’s chief operating officer, made disparaging comments about the former darling of the social networking space.
He described the site as a “problem” and said that a sale or partnership with internet giants such as Yahoo or AOL were two or a number of options under consideration.
Mr Carey, who has previously described MySpace’s losses as “neither acceptable or sustainable”, refused to set a deadline for the social networking site to return to profitability before it push ahead with a sale. “I’m not going to break down [the number of] quarters,” he said. “It’s not years ... we need to deal with this with urgency.”
According to a digital executive close to the company: “MySpace lost $100 million in the first quarter last year. To get it back on track is going to require a massive investment – one which News Corporation it not prepared to make. It has many other priorities to put its money into. So instead, it has been taking costs out of the business while it's still in its hands.”
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