Bought for $580m, sold for $35m: Murdoch cuts his MySpace losses

Rupert Murdoch's six-year stewardship of the social-networking pioneer MySpace reached its ignominious end last night as the media mogul sold the company for less than one-tenth of the price he paid for it.

Click HERE to view Myspace Years graphic (140 kb)

As part of Mr Murdoch's News Corp empire, MySpace lost its crown as the world's most popular social network and failed to re-invent itself as a hub for music and television content on the web, as he had hoped.

Instead, the website will be transferred to a surprising new owner, a US advertising company that specialises in tracking internet users around the web and targeting ads at them. The company, Specific Media, said MySpace will be an important addition to its services for advertisers, but declined to elaborate on its plans.

Specific Media is paying $35m (£22m) for MySpace, compared with the $580m News Corp paid for the site in 2005. Mr Murdoch was already resigned to making a loss, but yesterday's sale price was far below the $100m he expected to get when he put the business up for sale earlier this year.

Other terms were also disappointing: instead of getting all its money in cash, News Corp will receive shares in Specific Media and it will also have to hang on to a minority stake in MySpace.

The collapse in the site's value has tracked a collapse in the number of people using the site, and the amount of time that they spend there – and a consequent collapse in demand to place ads on the site, which is where Mr Murdoch hoped to make money. In the US alone, MySpace has lost more than half of its regular visitors since its peak in December 2008, and had just 34.8 million users last month; Facebook had 157.2 million.

"MySpace is a recognised leader that has pioneered the social-media space," Specific Media's founder and chief executive Tim Vanderhook said. "The company has transformed the ways in which audiences discover, consume and engage with content online. There are many synergies between our companies as we are both focused on enhancing digital-media experiences by fuelling connections with relevance and interest."

Despite the takeover, the company told its remaining 500 staff that more than half of them would be laid off, and the firings began yesterday. The company had 1,400 employees two years ago, but has been slimming down since News Corp decided it would no longer tolerate the site's spiralling losses.

Losses at the division that includes MySpace widened to $312m in the first six months of its financial year, which ended last December, and it is expected to have lost the same again in the first six months of this year.

News Corp originally set a deadline of this month for MySpace to become profitable, but instead turned it into a deadline for a sale of the website.

Specific Media was founded in 1999 by Mr Vanderhook and his two brothers, Chris and Russell, and has become one of the largest online-advertising networks in the US, able to create and place targeted ads across the web.

If there is one consolation for Mr Murdoch, it is that he bought MySpace before it peaked, and therefore paid less than he might have. AOL acquired Bebo for $850m in 2008 and sold it last year for less than $10m.

PROMOTED VIDEO
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    SQL Developer (TSQL, SSRS, SSAS) Fund Manager - London

    £45000 - £50000 per annum + Benefits: Harrington Starr: SQL Developer (TSQL, S...

    Software Developer (JavaScript, TDD, Jasmine, Angular.JS)

    Negotiable: Harrington Starr: Software Developer (JavaScript, TDD, Jasmine, An...

    Front-End UI/UX Developer (HTML5, CSS, JavaScript, jQuery, Ang

    £45000 - £50000 per annum + Benefits + Bonus: Harrington Starr: Front-End UI/U...

    Helpdesk Team Leader / Manager

    £45000 per annum + pension,medical: Ashdown Group: A successful & reputable gl...

    Day In a Page

    All this talk of an ‘apocalyptic’ threat is simply childish

    Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

    Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
    Mafia Dons: is the Camorra in control of the Granite City?

    Mafia Dons: is the Camorra in control of the Granite City?

    So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
    Emmys look set to overhaul the Oscars as Hollywood’s prize draw

    Emmys look set to overhaul the Oscars as Hollywood’s prize draw

    Once the poor relation, the awards show now has the top stars and boasts the best drama
    What happens to African migrants once they land in Italy during the summer?

    What happens to migrants once they land in Italy?

    Memphis Barker follows their trail through southern Europe
    French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

    French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

    The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
    Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

    Frank Mugisha: 'Coming out was a gradual process '

    Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
    Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

    Radio 1’s new top ten

    The ‘vloggers’ signed up to find twentysomething audience
    David Abraham: Big ideas for the small screen

    David Abraham: Big ideas for the small screen

    A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
    Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

    Florence Knight's perfect picnic

    Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
    Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

    Horst P Horst comes to the V&A

    The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
    Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

    Mark Hix's summery soups

    Soup isn’t just about comforting broths and steaming hot bowls...
    Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

    Tim Sherwood column

    I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
    Eden Hazard: Young, gifted... not yet perfect

    Eden Hazard: Young, gifted... not yet perfect

    Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
    Tim Howard: I’m an old dog. I don’t get too excited

    Tim Howard: I’m an old dog. I don’t get too excited

    The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
    Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

    Tom Peck on Match of the Day at 50

    The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition