It's official, News Corp. sold MySpace to advertising network Specific Media for around $35 million, and Rupert Murdoch can finally move on. That's far below the $100 million asking price, and even though News Corp. retains a less than five percent stake, if you crunch the numbers, like Arstechnica did, you come to the conclusion that Murdoch and Co. lost over $1 billion on this deal. How can that be when News Corp. bought the social networking site for $580 million?
"Just subtracting the sale price from the original price tag and calling it a $545 million short-sale doesn't it do it justice," Arstechnica writes , "because then you're ignoring the puts and takes of running the darn business. In fact, the whole process of figuring out the numbers is tricky because News Corp. and MySpace never talked about them."
Be that as it may, Arstechnica ran the numbers that it was able to obtain and made some assumptions based on monthly page views and 10-K filings. What it all boils down to is that "MySpace has cost Murdoch's empire something like $1.3 billion." Even if some of Arstechnica's numbers "are way off, the final cost can't be less than $1 billion," the site concludes.
It's not just News Corp. that suffers in the deal. Citing a source familiar with the matter, Nooga reports the sale resulted in the layoff of about half of the site's remaining 500 workers.