June 30, 2011
Specific Media Acquires MySpace For $35 Million
Sold! After a four-month bidding process, Rupert Murdoch's News Corp. has finally sold MySpace to advertising company Specific Media.
Although the sum of the deal was undisclosed, AllThingsD reported that Specific Media paid $35 million for MySpace, which was bought by News Corp in 2005 for $580 million.Specific Media CEO Tim Vanderhook saidin a statement: "MySpace is a recognized leader that has pioneered the social media space. The company has transformed the ways in which audiences discover, consume and engage with content online."
He continued: "There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest. We look forward to combining our platforms to drive the next generation of digital innovations."
Singer/Actor Justin Timberlake, who played Napster co-founder Sean Parker in "The Social Network," also signed onto the deal.
The Associated Press (AP) reports that he will have an active role in MySpace, with an office at the company's Beverly Hills headquarters and a staff working for him to develop his ideas for the site.
"When we met with Justin and we discussed what our strategy was, we hit a chord with him," Vanderhook told the AP.
"One of his passions is he really enjoys helping other artists and creating a community for people to really express themselves. I think we were blown away that we were able to get someone like Justin to be so excited about what we were doing," he says.
Vanderhook hopes that with the help of Timberlake, the site will be revitalized and revamped. MySpace will transform into a destination for original shows and strengthen the existing video and content of the site.
In addition, Specific Media will invest in new technology and continue to maintain its streaming music rights through MySpace Music, a joint venture with a relationship with major recording companies.
"There's a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect," Timberlake says. "MySpace has the potential to be that place."
The deal closed just in time for News Corp to rid itself of about $250 million in losses, estimates Barclays Capital analyst Anthony DiClemente. The end of News Corp.'s fiscal year is tomorrow.
According to the AP, News Corp., over the last 11 quarters, had a cumulative loss of about $1.4 billion on the business segment that houses MySpace.
However, News Corp will retain a minority stake in MySpace, a statement by the companies says.
In a memo to MySpace staff on Wednesday, the company's CEO Mike Jones said that he would help transition the company for two months before finally leaving.
Furthermore, the transaction will include the layoff of more than half of MySpace's 500-strong workforce, reports Reuters.
"My time here at MySpace represents the most engaging and challenging time of my professional career," writes Jones. "I have found our team to be comprised of the best people I have ever come across in our industry."
Gartner analyst Michael Gartenberg suggests that the new buyers of MySpace refocus the site on its music roots in order to hopefully change MySpace's downward trend in visitors.
"If they double-down in that area and really focus the site on music, and can fit in this with existing music services that are out there, and the strong social connection, there's probably some sort of profitable business that can be rebuilt out of it," Gartenberg told CNET.
"But is it going to be a site that's going to dominate the entire social-network space? I think those days are behind it at this point."
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