News Corp Paid Too Much For PhotoBucket

Echo To All submits: On the surface the News Corp. (NWS)/Photobucket deal looks cheap, very cheap. Especially when you have many bloggers praising the deal due to a ‘cost per visitor’ valuation basis. They then compared it to when Google (GOOG) acquired YouTube, and poo-pooed the cost of the YouTube deal.

However, and this is a BIG however, the unique visitor profile of PhotoBucket compared to MySpace shows about 99% already come from MySpace! Am I the only who thinks that NWS just paid about $300M for essentially no unique visitors? TechCrunch makes it a point to state that when Google bought YouTube, the overlap of visitors was about 80%. But, and I am surprised they even made the comparison, every website would have a high overlap with Google, especially when you control so much search market share. Also, the point of the YouTube acquisition was not to acquire visitors, but to come into the video space strongly. It made sense for Google to purchase YouTube.

Basically, NWS bought a $300M accessory to MySpace to build the brand. That is really it. The deal is not as special as it was originally thought.

Comments

[Craig Sherman:]

Disagree, because in fact the avg photobucket user expresses photos onto over 3 websites (of which myspace is generally one). Photobucket is the hub for younger consumer's digital media. Myspace is just one (albeit the largest single one) of hundreds of spokes. It is a vastly more valuable business than it looks superficially. The best M&A guys at the media companies competing on this deal - and there were many - got this.

2007 May 09 11:53 AM