NEW YORK (Reuters) – News Corp has sold Myspace for $35 million, a fraction of what it paid for the once-hot social media site even as a new generation of Web-based start-ups is enjoying sky-high valuations.
Advertising company Specific Media will team with the singer Justin Timberlake to acquire Myspace in a deal that caps a tumultuous period of ownership under Rupert Murdoch’s News Corp, which swooped in to buy Myspace for $580 million in 2005.
At the time, Myspace was among the world’s most popular websites, and News Corp’s success in beating out rival Viacom Inc in a bidding war was viewed as a major victory for Murdoch. Since then, however, Facebook has eclipsed Myspace in popularity, and the deal has become a hard lesson in what can happen when a traditional media company imposes its will on a start-up.
It also shows how quickly audience — and investor — tastes can shift in the world of social networking. Indeed, Wednesday’s deal contrasts sharply with the current frenzy over social media companies, including LinkedIn, Twitter and Groupon, among investors looking for the next big thing.