Home Facebook is the Winner of MySpace-Yahoo! Talks

Facebook is the Winner of MySpace-Yahoo! Talks

On Monday, shortly after Terry Semel stepped down as CEO of Yahoo! CNBC Wall Street correspondent David Faber floated a rumor that News Corp. might be interested in offloading MySpace for a sizeable stake in Yahoo! — about 25%, he said. This morning, News Corp. seemed to confirm the deal via an article in one of its own newspapers, the Times of London that News Corp. was indeed talking to Yahoo! about such a deal, though for a 30% stake. That would put the value of MySpace at around $10-12 billion.

Most pundits agree that this would appear to be a great deal for News Corp. (who would get a quick 2 year return on their investment in the 2000% range) and a bad deal for Yahoo!. Wired said the deal would be “desperate” on the part of Yahoo!, TechCrunch said the move would be “monumentally stupid” for the portal company. I’m inclined to agree, for the reasons that have already been discussed ad nauseum across the web. The big winner, however, regardless of whether the deal materializes beyond the rumor stage, is Facebook.

“A News Corp source said that Rupert Murdoch, the company‚Äôs chairman and chief executive, remained committed to the internet, although he has conceded in an aside in a recent interview with The Wall Street Journal that the privately owned Facebook was gaining ground. Asked whether newspaper readers were drifting off to MySpace, Mr Murdoch joked: ‘I wish they were. They‚Äôre all going to Facebook at the moment.'” – Times of London

That tongue-in-cheek remark by the News Corp. chairman may actually reveal some truth: MySpace is the darling of social networking no longer — that title now belongs to Facebook. As the blog WatchMojo.com speculates: “MySpace is growing ferociously but it is probably losing an inch every day to Facebook.” (Duncan Riley disagrees.)

While the numbers show that MySpace continues to grow, Facebook is growing at a faster rate (and fastest among the more attractive 25 and older demographic), and the Facebook platform has experienced phenomenal growth in its first month. It is attracting over 1,000 new developers per day and has resulted in 1,500 applications, according to Facebook, and the top 5 applications have almost 20 million users (nearly every one of my friends on the site has installed at least one application).

A $10 billion valuation for MySpace — whether or not the deal comes to fruition, as long as everyone gets on board with that figure — would appear to be great news for Facebook, who Read/WriteWeb thinks is on the path to a major IPO.

According to internal documents, Yahoo! valued Facebook at $1.6 billion last year. If they are now seriously considering MySpace in the $10-12 billion range, that can only be good news for Facebook, whose backers in the May issue of Fast Company said that “today, any offer around a billion would be way low.” Turning down a billion dollar offer from Yahoo! last year seemed like a gamble at the time, but today it looks like the value of social networking just went up again.

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