Photobucket Spins Out: The On-Purpose Failure to Integrate

A few years back when big media companies were snatching up web startups for exorbitant prices, old-fashioned concepts like corporate synergy were not a priority. Many acquisitions came with promises to leave startup’s brands, products and leadership alone. I wrote a story on the topic that focused on CBS (s CBS) buying and News Corp. (s NWS) buying Photobucket.

Acquirers, despite their enormous and asymmetrical audience, money, and power compared to their purchases, seem like awkward first-time parents afraid of hurting a baby. They are more than conscious of their status as old farts swooping in and quickly turning cool to lame.

The idea at the time was that online “community” was something big companies just didn’t get. “We have to keep the communities, otherwise what is the point,” CBS Interactive’s Quincy Smith told us. “Photobucket is going to be left alone, because it is doing what it is doing,” said News Corp.’s Peter Chernin.

The strategy didn’t quite work, with and Photobucket’s leadership now departed, not to mention Smith and Chernin as well. And today, MySpace announced that it’s getting rid of Photobucket entirely for what’s surely less than the $250 million plus a $50 million earnout it gave the company in 2007. The deal, which had been scooped by TechCrunch a couple months ago, merges Photobucket with camera phone software maker Ontela. News Corp. maintains a significant equity stake in the merged company, to be called Photobucket, and puts its digital head, Jon Miller, as a director.

That’s not to say all web community sites left alone don’t grow; for instance, Google’s (s GOOG) YouTube and Yahoo’s (s YHOO) Flickr are doing quite all right. But it’s true that neither acquirer was a media company.