updated 11:40 am EDT, Tue June 28, 2011
MySpace may sell to ad or equity firms at 30m
MySpace's decline may not only include major job cuts but a sale at just a fraction of its purchase price. New sources claim the social network may sell for between $20 million to $30 million to lower-profile buyers. AllThingsD identifies ad network Specific Media at the front but followed closely by Golden Gate Capital, a private equity group known for rescuing companies in MySpace's state.
The new job cuts, which could go to 50 percent or even to the 75 percent mentioned in a leak, are reportedly dependent on who makes the deal. MySpace's parent company News Corp might have a small investment in the resulting deal but will no longer have complete control. Just until the past week, many had expected the buyer to be a coalition involving Activision chief Bobby Kotick that would also give News Corp more influence, although it would still be in the minority.
Other companies are still talking and even include investment groups that separately include the social network's founders Chris DeWolfe and Tom Anderson.
The willingness to sell off for so low, just a fraction of the $580 million News Corp paid in 2005, may be a matter of expediency for the media outlet. MySpace has been a drag on News Corp's performance for the past few years as it has gradually lost out to Facebook. Selling MySpace before the end of June would make it a non-factor for News Corp's fiscal year, which starts in July.
MySpace's fall from grace has been blamed on several factors. Most see it coming from a reluctance to upgrade the site as aggressively as Facebook and the resulting lack of extras like apps. The company's failed attempts to challenge iTunes have also been regarded as distractions from improving MySpace itself.