After activist shareholders pushed Terry Semel out of Yahoo last week, his successor Jerry Yang needs to raise the floundering search engine’s advertising revenue quickly or re-don his jester cap as Chief Yahoo. Social networking is the obvious answer and after a potential Yahoo-Facebook deal fell apart earlier this year, Rupert Murdoch is the man to see. The Times of London, a News Corp. holding, reported yesterday that Murdoch and Semel had been in talks to trade MySpace for a 25% ($10-12bn) stake in Yahoo.
It is more than likely that Yang will pursue this deal with the leading social networker, even at Murdoch’s inflated price. Rupe paid $580mn for MySpace two years ago, but after Facebook’s financer said he wouldn’t sell for less than $8bn, a $10bn MySpace shouldn’t be anathema to Yahoo. If Yang balks at the Murdoch proposal, it may go down with Semel’s infamous missed opportunity to buy Google and will probably mean an interim-only CEO appointment.
With the news, Yahoo traded up 1.6% to $28.08 and News Corp. was up 1% to $23.92.
Yahoo! For MySpace? [Forbes]
The social network bubble [Valleywag]
Posted by anonymous, Jun 21, 2007 1:44PM
$8 billion? Where the hell do these valuations come from? Eventually everyone will move on from Facebook to some other website. Just like everyone moved from ICQ to MSN (skipping Yahoo"!" Messenger altogether in the process). Maybe I'm wrong, but this seems like the equivalent of paying $10 billion for a teenage fashion fad like Heelys shoes or True Religion jeans. And as everybody knows, you should never bet the farm on the brand loyalty of teenagers (or, I would say, young people in general).