MySpace will possibly have a new owner. The Wall Street Journal reports, that the News Corp.’s auction of the former called-for social networking site is coming to a close, with the media giant expected to receive a handful of bids by the end of the week that are in the neighborhood of $100 million.
This price is less than a fifth of the $580 million that Rupert Murdoch paid for the site six years ago. But then MySpace was named «the new Friendster» and this comparison was very flattering.
News Corporation is expected to sell the asset by or on June 30, 2011, in time for the end of its financial year. However, some sources familiar with the matter expect the process to draw out until “the very last minute”. News Corp. wants to keep a small percentage of the company, while handing over majority ownership to the buyer.
One source reports that News Corp. has restricted information concerning results of the MySpace’s activity so as to get the interest up as high as possible:“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,” Since then the company has fallen on hard times by pretty much any Web metric one looks at. It has lost active users, traffic, and ad revenue. Adweek comments MySpace’s position: “The company’s unique visitor count dropped 49% from this time last year, and in Q4 of 2010 MySpace lost $156 million.
Even its core users and traffic creators—bands and music fans—have abandoned the site, as evidenced by the avoidance of by music industry startups like social ticket agent Ticketfly.” But inspite of the decreasing interest to MySpace for last three years,it still does progress, given its name recognition and remaining approximately 50 million active users.
Such front runners as Thomas H. Lee Partners, Redscout Ventures, the chief executive of games company Activision Blizzard, social networking site myYearbook, Criterion Capitol Partners (the private equity company which bought Bebo from AOL last year), and Providence Equity are among those who is interested in buying the site.
One source, also close to the purchase process, states that News Corp. made a great mistake when it stopped investing in MySpace, in particulat it’s advertising:“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.”
A digital executive close to the company also states that the lack of investment played it’s role: “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.” [via The Wall Street Journal, The Slatest, The Drum, Social barrel]