The Puzzling Moves of Rupert Murdoch’s News Corp

Implications: 1.  What do the puzzling moves of Rupert Murdoch’s News Corp mean for Social Networking, MySpace and Facebook?    
2.  Is it time for a broader News Corp digital / media strategy?     

Analysis: The sheer dollar differential of a Yahoo-MySpace deal would make the swap another shrewd Rupert Murdoch play. News Corp paid about $580 million for MySpace in August 2005; twenty-two months later it would receive a stake valued at more than $10 billion as Yahoo is currently valued at $37 billion.

The current power and value of social networking is illustrated by the the ability that Murdoch can use such a small asset like MySpace to take out such a big piece of a company like Yahoo. However, with the most recent moves Murdoch may be signalling that social networking may have peaked and it is time for an even broader digital/media strategy for News Corp.

News Corp. has spent the last several years as Wall Street’s digital master, grabbing MySpace, building Fox Interactive and launching a "YouTube killer" as other media companies watched. However, News Corp.'s most prominent acquisition play at the moment is very Old Media… the $5 billion bid to buy the Wall Street Journal thru the acquisition of its parent Dow Jones.

Some would dismiss the Yahoo deal as a political move to show Murdoch is in an acquisition mode or even a way to save face if the Dow Jones bid doesn't go through. If the Yahoo deal is not such a political move you can be assured it is based on News Corp. analysis that MySpace is currently at or close to its perceived peak value and it is time leverage that value to make a broader new media play.