Online ad firm Specific Media has agreed to take MySpace off News Corp.’s hands for between $35 and $40 million, according to AllThingsD and the WSJ. News Corp., which was seeking about $100 million for MySpace, will retain a minority stake in the social net. MySpace has officially confirmed the deal. (More on the history of MySpace in our new timeline.)
A source familiar with the negotiations tells paidContent that the price is closer to $35 million and that News Corp.’s stake is around 5 percent. In a brief research note, Barclay’s Anthony DiClemente put it best, saying that News Corp (NSDQ: NWS). has finally rid itself of $250 million in fiscal year operating losses.
Updated: MySpace is releasing additional details about the purchase. In addition to reserving a small piece for News Corp., singer and actor Justin Timberlake will also take an ownership stake and play “a major role in developing the creative direction and strategy” for the social net. Specific Media and Timberlake will hold a press conference outlining their plans later this summer.
In the press release, Timberlake explains the relevance of MySpace and the reason for his involvement by saying, “There’s a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. MySpace has the potential to be that place.”
The addition of Timberlake into the mix is definitely notable from a branding standpoint — and perhaps he’ll bring something of Sean Parker, the early Facebook backer he portrayed in the film The Social Network — but as my PCUK colleague Robert Andrews quipped, “Can Justin bring the ‘Sexy Back’ to MySpace?” my other colleague, MocoNews editor Tom Krazit, said when he saw the Timberlake connection, “I was thinking more along the lines of ‘Cry Me A River’.”
Original post: Even with the small holding, the price tag is well below the $580 million News Corp ended up paying in 2005, not to mention the costs it endured over the years as it sought to rebuild the site as more of an entertainment and promotional destination.
As reported earlier, there were a number of contenders News Corp. had been considering, including separate investor groups comprising MySpace co-founders Tom De Wolfe and Tom Anderson remain interested, along with Bebo owner Criterion Capital Partners. Specific Media and private equity firm Golden Gate Capital were viewed as the most serious contenders.
In the meantime, some questions remain, such as what will happen with MySpace Music, which had been a recipient of significant investment by News Corp. as it sought to remake the company. Specific Media later told paidContent that the company would look to build up its entertainment offerings, but didn’t exactly address Myspace Music’s future: “Specific Media aims to fulfill the original promise of MySpace — be a true home for content creators and artists. Specific Media will invest in the site’s infrastructure, which will offer Myspacers an enhanced user experience.”
It’s also not clear how MySpace will fit in with Specific Media. Last fall, the ad network acquired video ad net BBE for somewhere between $65- and $85 million.
In a statement, Tim Vanderhook, CEO and co-founder of Irvine, CA-based Specific Media, pointed to MySpace as a vehicle for discovering, consuming and engaging with online content, adding that he sees ways of connecting that to the company’s promise to deliver “relevant” experiences for advertisers.
First Update: After speaking with several sources close to the company, Specific Media will decide what it wants to do with MySpace Music. As a condition of the sale, Specific Media said that 50 percent of the company’s 1,000-person workforce will be let go.
Meanwhile, MySpace CEO Mike Jones will remain on through a two-month transition period. Specific Media told paidContent he would be leaving “after a few months.”
As for the “synergies” Vanderhook spoke of, one of the smarter things Myspace has done over the past several months has been to streamline its ad sales force and rebuild its ties to the major ad agencies under a plan run by Nada Stirratt, Myspace’s chief revenue officer. It began rolling out “social” ad units last fall. This past spring, the company began promoting a full slate of larger, interactive ad units.
The current ad sales structure involves two core teams in New York, two in Chicago, one in San Francisco and five in LA. Each core team is assigned an agency. But with massive layoffs coming, all the work spent putting those teams in place could be changed once again, though no there was no word on any decisions with respect to ad sales yet.