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Showing posts with label MySpace profit. Show all posts
Showing posts with label MySpace profit. Show all posts

June 30, 2011

The End of MySpace:To be Sold For $20-30$ Million


This chart, based on data from eMarketer, using estimates on Myspace revenue which are still merged with the rest of News Corp's Fox Interactive Media division, tells the story.





Back in 2008 MySpace was on a roll. They racked up $900 million 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 cofounder and CEO Chris DeWolfe was gone.Rupert Murdoch's News Corporation bought Myspace in 2005 for $580m. In 2006 Google signed a $900m deal to sell ads on Myspace; by 2007 it had 300m registered users and was being valued at $12bn. But the social network was subsequently crushed by Facebook, which launched a year after Myspace.
News Corp. is about to sell Myspace for $20 million-$30 million, Kara Swisher at All Things D reports.The groups vying for the remains of Myspace are Golden Gate Capital, a PE firm with $9 billion under management, and Specific Media, an ad network.


News Corp.'s fiscal year ends this Thursday, so it's looking to wrap up the sale before the end of the fiscal year, so it can get Myspace off the books for 2012. MySpace Revenue for fiscal 2011, ending June 30, 2011, is expected to be just $109 million. Expenses for the year are projected to be $274 million, and the company will lose a whopping $165 million for the 12 month period. That’s after massive waves of layoffs, although I expect much of the costs of the layoffs are included up front in 2011 expenses.




This is quite the come down for Myspace. News Corp paid $580 million for Myspace in 2005. When it started selling Myspace this year, it was looking for $100 million.



The price, said others, could go as high as $35 million, but it’s far cry from the $100 million that News Corp. had been aiming for.As part of the deal, sources said the News Corp. unit will be making significant cuts in staff and costs — up to 50 percent or more — all contingent on the purchaser. 

The two names — Specific Media and Golden Gate Capital — that are now in the forefront for an acquisition deal that News Corp. hopes to complete by Thursday, its fiscal year end, have not been among the acquirers mentioned previously in the myriad of reports about the deal.

  • Myspace is going to lose $165 million in the fiscal 2011 year. (That's the 12 month period ending June 30, 2011.)
  • For that period, revenue is expected to be just $109 million. Expenses are $274 million.
  • Myspace says it will have $15 million in earnings before interest, tax, depreciation, and amortization (EBITDA) in 2012. How does it get there? Revenue drops to $84 million and expenses drop to $69 million. (This suggests big layoffs are coming.)
  • From there, Myspace predicts sales $101 million in 2013 revenue, $119 million in 2014 revenue, and $139 million in 2015 revenue.