Why Yahoo! Should Pursue The MySpace Purchase

You’ve seen the headlines. Declarations that Mr Murdoch is fiddling with the idea of selling MySpace off to Yahoo! for a 25% stake in the Net’s #1 portal. That would mean those at Newscorp thought their dastardly ugly (they of course likely think she’s beautiful, as does most any parent - particular a parent with a big financial interest in its kin) social network was worth just north of $10 billion. Putting aside numbers for a moment, though, a sell-off of MySpace to Yahoo! may actually be a deal that could benefit both parties. Here’s why.

Yahoo! is languishing. It’s hurting. It’s…depressed. Yes, its numbers are still very impressive, but its future doesn’t look as rosy as Google’s, and investors in the Y! are getting more and more testy as they see Google claim greater and greater dominion over…well, everything, really. Also, considering GOOG is flying high at $500+ on the NASDAQ at present, YHOO’s sub-thirty-dollar price tag on Wall Street doesn’t look that attractive at all. Of course, how anyone but the wealthiest of folk can capitalize on GOOG now is beyond me, but you get the picture. 

In short, Yahoo! needs some freakin’ wings. It needs to reshuffle and reinvent itself, and it really wouldn’t hurt the company to make an effort to get into the social networking biz. Social networking is big, after all, and the fact that MySpace stands as a ready-made success must make it look all the more enticing as a potential asset. Numbers-wise, anyhow. Visually? Not so much.

MySpace wouldn’t put Yahoo!’s fate on the expressway to superstardom once again. (Refer to the pre-1999 era to get a glimpse of what that looked like.) The social network is clearly at the height of its success, and unless it gets something of a revamp itself, it won’t maintain well. It needs freshening up. A new design. Some pleasant, yet appropriately-generic themes. An easier to use interface. A complete tune-up, in short. (Which Yahoo! would likely administer when it signed a portion of its soul - if it indeed does so. You know, to make it fit the Yahoo! network a little better.) All in all, though, MySpace would fit snugly into the Yahoo! kingdom without becoming a couch potato of sorts.

There are a lot of particulars to sort out before this deal could get solidified, the largest being the figure requested by Murdoch and gang to toss Yahoo! the key’s to the MySpace operation. Quite frankly, I very much doubt Yahoo! would relinquish control over 25% of the company. While the $37.5 billion value placed on Yahoo! appears legitimate, the $10 billion tag attached by Newscorp to MySpace looks downright inflated. At best, that figure should realistically be cut by about 50%, maybe more.

When all is said and done, however, the Yahoo-MySpace deal looks like a win-win for both parties. On one side there stands Newscorp with a weighty Web 2.0 asset on its hands that looks like it’s just about peaked. On the other is Yahoo!, which needs one big honkin’ shot of adrenaline to wake it up from its stupor. A MySpace purchase could be an invigorating addition to the business.

Again, we shouldn’t expect any miracles to come of this potential swap, but there’s reason to believe very good things can indeed result. Of course, if Google were to buy Facebook now or in the near future, this entire forecast would be void. We shouldn’t put it past Larry and Sergey do so, either.