[img src="" caption="" credit="" alt=""]
There is a lot of chatter today about MySpace missing its “revenue targets” – Wall Street gibberish meaning the company didn’t make as much money as people were hoping it would in its most recent quarter. While I realize such a shortfall has implications, especially for shareholders of News Corp, I’m going to commit a cardinal sin here and wax poetic about what a great deal Rupert Murdoch made when he bought MySpace for $580 million back in 2005 (before there was even a Mashable to cover social networking news!)
Fox Interactive, the bulk of which consists of three companies News Corp acquired: MySpace ($580M), Photobucket ($300M), and IGN ($650M), were purchased for a combined $1.53 billion. [img src="http://i29.tinypic.com/29vjxhu.gif" caption="" credit="" alt=""] Even after News Corp lowered its revenue estimate on these properties by 10 percent yesterday, they are still on track to pull in $900 million in revenue this year. In other words, the price of the companies that Murdoch acquired relative to their sales is now only 1.7. Compare that to Facebook, where at a $15 billion valuation (according to Microsoft) it is worth roughly 100x estimated sales, and you get the idea: MySpace was the biggest steal in the history of the Web.
And, it gets better: while MySpace may not be monetizing as well as analysts would like right now, with the impending launch of downloadable music (an iTunes competitor), an application platform that now sells sponsorships at $50-100k per week, and its “hyper-targeted” ad platform, there are plenty of things in the works that point to better times ahead financially, so long as the site doesn’t begin bleeding users. Plus, if the pressure really intensifies for MySpace to improve its numbers, Murdoch can always sell it to someone desparate for a social networking strategy - like Microsoft or Yahoo.