Timberlake's helping bring MySpace back as cash cow for $35m
News Corp has agreed to sell MySpace to Specific Media for a fraction of what it paid six years ago, ending its efforts to turn around the money-losing social networking business.
News Corp will receive $35m (€24.1m), including a 5pc stake in Specific Media, which announced the sale in a statement yesterday, without providing the terms. Singer and actor Justin Timberlake, pictured right with actress Cameron Diaz at the premiere of 'Bad Teacher' in New York, is taking a stake in Specific Media as part of the deal.
The accord rids News Corp CEO Rupert Murdoch of a website that lost its lead in social networking to Facebook after being acquired in 2005 in a $580m (€399.5m) deal. The company had sought about $100m (€68.8m) for MySpace after chief operating officer Chase Carey said in February he wanted a deal completed by June 30, the end of the parent company's fiscal year.
"It gets Myspace off their books finally, which has a certain value," said Michael Gartenberg, an analyst at Gartner, a Stamford, Connecticut-based, research and advisory firm.
"This shows how fast things change on the web and how quickly $580m in value can vanish."
MySpace CEO Mike Jones will depart after a two-month transition that includes "significant" job cuts, he told employees in a memo. News Corp, based in New York, will own a stake in the online advertising company after the sale is complete, Specific Media said in the statement.
"Social media has forever changed how people find and interact with entertainment," Tim Vanderhook, CEO of California-based Specific Media, said. "There are few names that have the international prominence of MySpace."
For Specific Media, MySpace's 34.9 million monthly visitors provide an audience for its network of online ads. The company was formed in 1999, and in 2002 created an advertising network that places marketers' messages on websites.
Timberlake will take an unspecified stake in Specific Media and help develop a new MySpace strategy, the company said. Details will be announced by September, Specific Media added.
Timberlake will keep an office at MySpace, which will likely move out of Beverly Hills by the end of the year, and oversee a team of about six employees focused on developing products, Mr Vanderhook said.
"We hope to reinvigorate the brand and give users a reason to come back," Mr Vanderhook said. "Justin Timberlake will advise us on how to get them back and give consumers a reason to come back to a brand that has been challenged."
Mr Vanderhook takes credit for creating the so-called pop-under advertising unit after the dot-com bust a decade ago.
Specific Media has run campaigns for Jeep dealers, a lottery and Air New Zealand, their website says.