Special report: How News Corp got lost in Myspace
By Yinka Adegoke
NEW YORK (Reuters) - As Rupert Murdoch stepped into the Grand Ballroom of San Francisco's Palace Hotel at the Web 2.0 conference in October 2007, the developers and engineers who packed the room fell into a respectful hush. It was the sort of greeting usually reserved for one of their own tech heroes, not a 76-year-old media mogul.
Sitting cross-legged on a red leather couch, Murdoch looked relaxed in an open-necked shirt. Next to him sat Chris De Wolfe, the co-founder of Myspace, the social network that News Corp's chairman had acquired for $580 million two years earlier.
De Wolfe had spent weeks trying to sell Murdoch's advisers on the conference, which he saw as a kind of digital coming out party for his boss. But those close to the News Corp chairman worried he might embarrass himself in front of the technorati. Murdoch wasn't concerned. "I'll do whatever we need to do for Myspace," he told associates.
After the conference, Murdoch and De Wolfe ambled across the road to a party hosted by Myspace inside San Francisco's Museum of Modern Art. At one point, 20-odd people stood in line for a chance to speak with him. "He was like a rock star," De Wolfe later told a friend.
Today, Murdoch has clearly lost his affection for Myspace. In fact, News Corp has put the money-losing site on the block. Some believe News Corp might be willing to unload Myspace at a bargain price.
News Corp's bankers Allen & Co have been approached by nearly 20 parties, including Chinese Internet holding company Tencent; Myspace's original co-founder De Wolfe backed by Austin Ventures; and the current management led by Mike Jones, who would consider a buyout if he can raise the funds, according to people with knowledge of the various plans. News Corp has also approached Vevo, an online music video site jointly owned by Universal Music, Sony Music and Abu Dhabi Holdings, to discuss a possible joint venture.
Whatever the outcome, the nearly six-year-old marriage has become the latest example of what can happen when a traditional media company imposes its will -- and business plan -- on a start-up that has not yet reached its potential.
Interviews with executives who have worked for Myspace and News Corp underscore a stubborn cultural divide that they say exacerbated the once dominant site's problems and hastened its decline. Myspace has now been eclipsed by a rival that Murdoch once dismissed as a "communications utility" -- Facebook. Continued...