Digital Journal — What was once the darling of a media conglomerate’s social-networking venture is now the bargaining chip to be part of a larger technology business. MySpace is still massively popular, at 183 million members currently, but now parent company News Corp wants to swap MySpace for a 30 per cent stake in Yahoo.
The Times in the U.K. reported the tentative talks come at a time when News Corp is: interested in a deal even if it means losing some control of MySpace because it would give the media group exposure to a far larger Internet-based business.
What’s the appeal for Yahoo? With MySpace in its arsenal, the tech company would be a major player in the social-networking arena. Yahoo’s rival, Google, is already storming ahead with YouTube, and Yahoo failed to buy Facebook for $1 billion (all numbers US) last year. So having MySpace under its belt would be a major coup for a company looking to extend its reach beyond a Net portal.
Yahoo founders, Jerry Yang and David Filo.
News Corp isn’t content with sitting still. In fact, the rumoured Yahoo deal would demonstrate a swift return on News Corp’s investment in MySpace, which it bought for $580 million in 2005. A one-quarter stake in Yahoo is estimated at $11.1 billion, but the deal’s value extends past the dollars and cents: News Corp properties like Fox would benefit with a strong Internet backbone to help boost its online presence.
The Times reported Rupert Murdoch, CEO and chairman of News Corp, wants to continue his commitment to Internet-based businesses. But Murdoch admitted in a recent interview with the Wall Street Journal that MySpace’s competitor, Facebook, is gaining considerable ground. When asked is newspaper readers were turning to MySpace, Murdoch replied: I wish they were. They’re all going to Facebook at the moment.
This half-joke aside, News Corp has been on a tear recently to buy businesses it hopes will elevate the conglomerate even further ahead of competitors. News Corp is also pursuing a bid to purchase Dow Jones, publisher of the Wall Street Journal, for $5 billion. According to News.com:
Media experts say that the proposed deal would give News Corp. an immediate entry into the financial news world and— at least in the short term— the News Corp/Dow Jones combo could be more about television than the Internet. News Corp execs have long expressed aspirations to launch a financial news cable channel to rival CNBC, and the acquisition would give them a leg up in that effort.
It looks like the News Corp/Dow Jones deal has a better chance of getting inked compared to the Yahoo partnership, mainly because Yahoo’s chief executive Terry Semel suddenly left the company earlier this week. The Internet portal is now headed by co-founder Jerry Yang, who contends Yahoo will remain independent. But since Google makes more in three months than Yahoo does all year, Yahoo needs to shake up its operations in order to appease shareholders.
Can MySpace reverse Yahoo’s fortunes? It needs a social media presence, especially in light of its other properties focusing on collaborative content (flickr, Delicious, Answers.com). The addition of MySpace would give Yahoo a well-rounded stable of new media companies to better impress tech analysts and prospective buyes.
Fox Interactive Media headquarters in Beverly Hills, CA is also home to MySpace hq.
If Yahoo does nab MySpace, it has a chance to makeover the social-networking site in order to quash the Facebook phenomenon. MySpace hasn’t been very inventive in the past year, relying on its reputation and interface to corral more users. But Facebook is known as a more intuitive and cleaner site, and is especially winning friends for limiting the amount of eye-blinding flash ads. Could Yahoo put the mojo back in MySpace?
Murdoch and the News Corp digital division may not want to rest on MySpace’s laurels to give it a tech edge on the Net. Their proposed deal is a sign News Corp is focusing on an established Internet portal, even if that portal has struggled recently. News Corp’s stake in Yahoo is no small deal — well, an $11.1 billion stake is never small. But what the combo foretells is a future where media empires are dipping their fingers in every pie on the Web in order to attract young generations to their content. Rupert Murdoch might officially be a senior citizen but he’s definitely young at News Corp’s heart.
