Wednesday, June 27, 2007

Is MySpace in play? Reading the Tea Leaves.

MySpace founders Chris DeWolfe and Tom Anderson have made a very aggressive compensation proposal to owner News Corp for when their contract is up in October. They're asking Peter Chernin and Rupert Murdoch for a 2-year deal worth $50 million total. Plus, the pair want a development fund of $15 million to invest in internet companies. Apparently News Corp is very cheap when it comes to executive salaries (well $15 mil a piece is not cheap to most of us but in the executive world it may be)

I'm just "Reading the Tea Leaves" here but it seems to me that MySpace is very much in-play. News Corp is close to getting Dow Jones & Company and has floated a swap of MySpace to Yahoo for 25% of the company which would make the deal worth around $10 Billion. That is a huge ROI in just 2 years. I think Murdoch has cooled on MySpace and is looking to cash out. I would be too, Social Networks are proving to be very fickle. First it was Friendster, than MySpace and now Facebook is the King of Social Networking.

So, who would the potential suitors be? I think Yahoo is definitely in the driver's seat but they have traditionally been procrastinators when it comes to the big deals. Microsoft, Google, IAC are others that might test the waters but I doubt any of them would pull the trigger. eBay might consider it as they look to introduce the next generation to eBay. I think eBay should be in Yahoo's ear right about now (they are oh-so friendly these days) If Yahoo were to do a deal for MySpace they could scrap the current Google deal and open the door to eBay for an ecommerce solution for MySpace users.

Will it happen? Who knows once these companies actually sit down to negotiate anything can happen but it does look like a strategic fit for Yahoo and their good buddy eBay.

Just my 5 Cents!

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