$550 million loss o$30 million profit.
A question who’s answer is as shady as My space future,according to people close to sources News corp Inc. is on a run to sell My space by the end of this week, which would also mark the end of News Corp’s financial year, so removing my space from its 2012 books. News Corp. which paid $580 million back in 2005 to own Intermix media ,parent company of My space, was seen selling the deal for My space at a price as low as $100billion in January and now is finalizing the deal in a range o of $30 million to $20 million according to the insiders who wish to remain anonymous, with two potential buyers,Specific media and Golden gateway in the front. Officially Allen & Co. is hired to sort out potential buyers and look for other options.
Specific media a large if lesser known,is a advertising network funded by Fransisco partners and Golden gate a private equity firm with $9billion in under management.
Territory of rumors also lists Zynga , the San Francisco casual gaming start-up as the potential buyer which according to the math also meets the criteria.The math goes like this
With Zynga spending about 20% revenues for acquiring user’s through Facebook which spend came to $170 million last year, is loosing out profits due to its facebook dependency, where facebook also takes 30% cut of every virtual currency Zynga makes.In this case Zynga has reasons to run in as a buyer where in worst case scenario Zynga can milk My space as a different kind of user acquisition tool, with worth 44 million new user’s.
Another bidder from the rumor’s town is Erion Capital Partners, which bought AOL’s bebo social networking site for less than $10 million last June, but we have to wait to see that which road My space will take.
According to COM SCOR INC, at it’s December peak , My space attracted 75.9 million unique visitor’s alone, which dropped to 34.8 million by may of this year,almost 44% of reduction.According to “Mike Arrington at Tech Crunch“ who got a look at the confidential My Space pitch book that parent company News Corp. has distributed to potential buyers, a funny thing has came up, which despite of constant profit depreciation and increased expenses,has made My Space profitable on paper’s at least.
Expected Revenue for fiscal 2011, ending June 30, 2011, is $109 million. Projected Expenses for the year are projected to be $274 million, which results in a whopping loss of $165 million for the 12 month period, which includes costs of the layoff’s. After this they have added a flavor of fiction to the pitch book which states , after a loss of $165 million in fiscal year 2011,they expect to have $15 million EBITDA in fiscal 2012, with revenues falling only 23% in next year in contrast to costs which will decrease by 75%, which is revenue decreasing to $84 million in next year from $109 million in this year, but expenses falling to just $69 million next year from $274 million this year, HOW? Of course they don’t plan to answer this, otherwise Pitch book would not have reflected the same.
With company losing 14% audience every month, Mismanagement, a flawed merger ,and countless strategic blunders have accelerated My space fall from being the most popular website on earth.
Also Rupert Murdoch who was initially excited of his new digital plaything lost interest in My space as his pursuit of wall street journal, which News Corp. bought in 2007, which is considered a major reason of My space downfall, reports industry critics.
Back in 2008 My Space was on a roll. They racked up $900million in revenue and the company was still growing. But a year later top execs started to bail (the smart ones went early). Within two months co founder and CEO Chris De Wolfe was gone,what happened suddenly, will remain a mystery .
Former execs of My space who left the News Corp. at the right time includes names as big as
Owen Van Natta:Former My space CEO , who was fired from that job in one of its many putsches and who quickly rebounded at atop job at online gaming powerhouse Zynga.
Jason Oberfest: Former SVP of business development. Now, VP Ngmoco
As analyzed, most of the Top shots at News Corp. has joined My Space rival companies like Facebook,Yahoo, Twitter
With only 400 employees left in My space ,and a plan to lay off at least 150 employees and to put another 150 employees on a transition plan , the story of My space , comes to a closure, but still it can be a matter of discussion that,
Is it a $550 million lose or a $30 million profit.