Ahhh -- some executives really do have a great sense of humor. So News Corp (NASDAQ:NWS) COO Chase Carey said that the company was open to selling or partnering with others in an attempt to regain some of its lost value. First off, just for sake of disclosure, I’m not a fan of the way that NewsCorp has managed MySpace, and have already written about the reasons why the company was failing. Saying that it’s because of the competition is a major overstatement, in my opinion. There was more than enough space for both.
But you had Facebook on one hand, which was focused on growth and improving the user experience, and News Corp and MySpace on the other, which had one focus: $$$$. You could say that it worked in a sense, as MySpace did generate close to $800 million in sales of ads through Google alone -- which is probably enough to pay for its $580 acquisition and operating costs. But that also seems like a very bad business decision when you consider the fact that the once-smaller Facebook is now worth $50 billion! Just take a look at the traffic charts and you'll see the whole story:
Why is MySpace for sale?
It’s quite simple. NWS has used MySpace as a cash cow, but it’s now seeing those revenues dry up very quickly -- and wants to get a little more out of it before the story ends. It is no longer seen as “cool” to be on MySpace, and many users simply use it because some elements of their social network have not moved yet. But traffic is diminishing quickly.
“I’m not going to break down (the number of) quarters ... It’s not years … We need to deal with this with urgency.” – COO Chase Carey.
Seriously? Did News Corp just wake up? It did exactly what needed to be done to accelerate MySpace’s death for a few years, and now it's hoping for a miracle?
Who will get involved?
There has been speculation about who would want to take over the sinking social network and, honestly, I don’t think much of it makes sense. There is just no way that Facebook or Google (NASDAQ:GOOG) would pay to get involved in a project that seems doomed from the start. It would probably make more sense to just launch something new than be associated with the MySpace brand name. Honestly, the only two companies that could be seen as possible buyers are:
AOL (NYSE:AOL): AOL has a lot of properties, but I don’t see it getting involved here. It's been doing the smart thing under CEO Tim Armstrong as it continues to get rid of older and less attractive properties such as ICQ. I would be very surprised if AOL would fall for this.
Yahoo (YHOO): The one company that I could see getting involved is Yahoo, which continues to lack a clear direction. I’m far from sure of what Yahoo is trying to do, and it seems to be in a panic mode with more job cuts to be made in the near future. A desperate company with deep pockets could be just what News Corp has been looking for.