MySpace for 25% of Yahoo's place

Yahoo! headquarters in Sunnyvale, Calif.

TEXT OF INTERVIEW

Bob Moon: Rupert Murdoch reportedly is prepared to hand the popular social-networking site MySpace over to Yahoo in exchange for a 25 percent stake in the combined operation. This news today from the Times of London, a paper that Murdoch owns. The reporter who broke this story, Dan Sabbagh, is on the overseas line with us. So you say Mr. Murdoch might also be ready to throw in his online game site IGN. What would be in it for him?

Dan Sabbagh: Money, I think, straightforwardly. Yeah he bought MySpace for about $580 million what two years ago? We think he wants to wrap IGN, also bought around that time, so about a billion and change worth of investment. Quarter of Yahoo, well that could be worth $12 billion, so you know, making 12 times your money in two years, that's pretty attractive to anybody isn't it?

Moon: Yeah that's not a bad turnaround, but he would lose some control over MySpace correct?

Sabbagh: Clearly he would lose some control and News Corp is obviously signaling it's willing to do that. And you know, having 25 percent of Yahoo well that's an interesting place to start. Maybe that stake could be increased over a long period of time.

Moon: Any idea how Yahoo might feel about this deal?

Sabbagh: I think with Jerry Yang taking over there may not be the appetite for this discussion. The leak though is interesting in the sense tha Yahoo is obviously very keen to get into social networking. We saw that with its interest in Facebook. Being offered a chance to gain control of MySpace, that's the kind of thing that might get Wall Street talking and might put some pressure on Yahoo management.

Moon: Dan Sabbagh, media editor of the Times of London, thank you for joining us.

Sabbagh: Thank you very much.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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