Updated at 5:00 p.m. PT:
That MySpace was going to be sold for pennies on the dollar was no surprise.
What no one saw coming was that Justin Timberlake would emerge as one of the floundering social networking site's new owners.
Of course, the brunt of the work will fall to Specific Media.
The Irvine-based ad network beat out three other bidders on Wednesday to buy MySpace for roughly $35 million, mainly in stock, according to an individual with knowledge of the deal.
That is a stunning comedown for the News Corp. property, purchased in 2005 for $580 million. At its peak in 2007 the site was valued $12 billion.
The new owners will use MySpace's 77 million users and more than $100 million in ad revenue to expand its own network.
As for Timberlake, who played social media guru Sean Parker in "The Social Network," the actor and pop star will have an ownership stake and drive creative strategy for the new company.
“There’s a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. Myspace has the potential to be that place,” Timberlake said in a news release. “Art is inspired by people and vice versa, so there’s a natural social component to entertainment. I’m excited to help revitalize Myspace by using its social media platform to bring artists and fans together in one community.”
Also read: MySpace: How Does a Buyer Resurrect a Wounded Internet Brand?
Specific Media currently reaches 170 million users through various outlets and could pad its numbers and its rates by adding MySpace members to the pile. More importantly, Specific can mine MySpace user's accounts for information that would allow it to better target its online ads.
The company said Wednesday that it intends to invest in improving the site's infrastructure, indicating that it sees its new purchase as more than just a case of scavenging for parts. Likewise, with Timberlake's involvement, Specific is looking to capitalize on MySpace's reputation as a destination for music lovers and turn the beleaguered site into platform for digital entertainment.
But it had better be warned. News Corp. employed a similar strategy when it relaunched MySpace with a renewed focus on music last Fall. Sadly, the overhaul has done little to improve MySpace's fading membership rolls.
The Specific offer beat out three other bidders, though it would be a stretch to call the sale of the once-hot social network's remains a bidding war
As part of the purchase, MySpace CEO Mike Jones told his staff in a memo that he would be departing: "In conjunction with the deal, we are conducting a series of restructuring initiatives, including a significant reduction in our workforce," he wrote. "I will assist Specific with the transition over the next two months before departing my role as Myspace CEO."
Pink slips were going out on Wednesday to hundreds of MySpace employees — more than half of the 400 remaining employees, according to an insider.
The sale represents an embarrassing loss for News Corp., which bought the site as it was experiencing meteoric growth and on the cutting edge of the social media technology craze. It ended up being eclipsed by Facebook, which took off while MySpace suffered from disorganization, privacy issues and a less sophisticated technology platform.
After a couple of years of trying to turn the division around, News Corp. decided to unload the site while it still had some value. As part of the sale, News Corp. gets a 10 percent stake in Specific.
Negotiations for the troubled social media site accelerated on Tuesday among the four bidding groups.
Others in the hunt for the troubled social media company were MySpace co-founders Chris DeWolfe and Tom Anderson, both of whom submitted separate bids with private equity partners contributing backing. Bidders for the company also included Golden Gate Capital, a private equity firm.
Despite grand ambitions, MySpace never became the vehicle for News Corp. content that Rupert Murdoch predicted when he shelled out hundreds of millions to buy the social network, something the company has publicly acknowledged over the past year.
“The new MySpace has been very well received by the market and we have some very encouraging metrics. But the plan to allow MySpace to reach its full potential may be best achieved under a new owner,” News Corp. COO Chase Carey said after a recent earnings announcement.
Realizing MySpace's potential now falls to Specific Media and Timberlake. The News Corp. era is over.