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MySpace Acquisition Proves Savvy for News Corp.

  • Fortune, Thursday, March 30, 2006 2:15 PM
When News Corp bought MySpace in July last year for $580 million, few would have thought eight months later we'd now be talking about how that was a bargain. The social networking site has simply exploded, having recently become the second-most popular Internet site after Yahoo, but ahead of MSN, AOL, and Google--all in less than three years of existence. The clearest indicator that MySpace was a reasonable deal for News Corp is the $2 billion asking price of Facebook.com, an online student networking site and MySpace rival, which recently turned down a $750 million bid from Viacom. Social networking will continue to rise, but the lack of an effective means of verifying users' ages and the overall "moral panic" surrounding sexual predators is sure to stunt growth and keep away certain advertisers. Even so, MySpace is in the midst of boosting its ad sales staff, and is now asking for much higher ad rates: the home page now sells for $750,000 a day, up from $100,000. Current advertisers include movie studios, fast-food outlets, soft drinks, and cell phone companies.

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