Not only did little-known ad tech company Specific Media acquire the once-mighty MySpace from News Corp. for $35 million in cash and stock today, but it secured Justin Timberlake as an equity investor and creative player in the process.
As a condition of the sale, MySpace let go of half of its 500 employees; News Corp. will retain a 5% stake in the site.
We asked Specific Media CEO Tim Vanderhook what in particular he saw in MySpace, which lost close to $651 million in the 12 months ended in March; how he got Mr. Timberlake involved; and what the plan is now.
Ad Age : You said you will maintain the MySpace brand and that it will operate as a subsidiary within Specific Media. CEO Mike Jones said he'll be leaving in a few months. Who's going to be in charge of MySpace?
Tim Vanderhook: We don't have that person today. The one thing we were looking for immediately was bringing Justin Timberlake in -- we were looking for someone to drive creative strategy. But as for day-to-day, myself and my brother Chris will take over day-to-day.
Ad Age : So there won't be a MySpace CEO anymore, but more of a general manager type?Mr. Vanderhook: That's correct. Specific is just going to handle the ad sales side, and MySpace will be focused on the community.
Ad Age :: How did Justin Timberlake get involved?
Mr. Vanderhook: As we started to recognize this transaction was going to happen, the one thing we wanted was help from the creative community. We thought, "Who is the most talented person for this?" And it was really Justin. We saw different groups of people, and he got incredibly passionate about it.
Ad Age : So, Justin Timberlake has a minority stake in the overall business. Did he put in his own money?
Mr. Vanderhook: Yes, his own money.
Ad Age : How much of his own money?
Mr. Vanderhook: I can't tell you that .
Ad Age : What will be his role at MySpace? Will he be there day-to-day?
Mr. Vanderhook: Justin is a very busy person with many careers. He will have an office in MySpace, and he'll have a team there. Probably not going to be there every day.
Ad Age : Do you think he was inspired by the role he played in the movie about Facebook, "The Social Network"?
Mr. Vanderhook: I don't think it was so much that -- that was just ironic. He's really passionate about how can he create a better community.
Ad Age : Speaking of that , what are you going to do with MySpace? Will it be a music hub? Will it take on Facebook?
Mr. Vanderhook: We intend to make MySpace what it was supposed to be. We want to fulfill the original promise of MySpace -- be a true home for content creators and artists.
Ad Age : Can you be more specific?
Mr. Vanderhook: We're going to hold a press conference in 60 days with me and Chris and Justin, where we'll unveil more of our strategy. But, basically, we want to build community tools that will help those individuals.
Ad Age : How are you going to manage the financials of the company? Shedding half the labor force will help, certainly, but it cost News Corp. over $600 million in the last year or so. How will you do better?
Mr. Vanderhook: This is about reinvigorating the brand of MySpace and making it successful. We're going to make it grow.
Ad Age : Will there be any more layoffs?
Mr. Vanderhook: No. We're about investment. We'll take another look after 60 days and we'll invest in the areas that are under-resourced.
Ad Age : Looking at it from the other angle, News Corp. accepted an equity stake in Specific as part of the $35 million deal. It appears you got a great price. Was MySpace a steal?
Mr. Vanderhook: No, I don't think MySpace was a steal. There are some challenges with MySpace. What we're going to bring is a ton of passion and energy. And with News Corp., they're a top-notch organization, and we're happy for them to be a shareholder.
Ad Age : How much of this deal was motivated by the great sea of data MySpace still has? Specific Media targets online ads based on people's habits online.
Mr. Vanderhook: Honestly, zero. For Specific, we want to build a big digital media company. We have a great third-party network of publishers. With the acquisition of MySpace, Specific looks more like a Yahoo or a Google than it does just an ad network. MySpace is an iconic brand. They have 70 million to 100 million unique user-reach in any month. We're a digital media company.
Ad Age : Specific has capitalized at over $100 million, and you've told me you're profitable, and this MySpace deal appears to not have involved a lot of cash. Should we be looking out for more acquisitions from you guys?
Mr. Vanderhook: Absolutely. We're in growth mode and going after this digital-media contest, we're going to be active. So, yes, look out for more.