Should Groupon Purchase MySpace?

by nikiscevak on February 3, 2011

Groupon and other Daily Deal sites will likely spend $1 billion in online ad spend this year. And most of that will be on Facebook and Google.

Given that Facebook will likely be the number one source, is it so preposterous that Groupon would buy MySpace at the right price? Now that News Corp has hung the for sale sign out and CEO Chase Carey seems particularly repulsed by the subsidiary, the timing seems right for a low price.

As well as the upfront cost, Groupon would have a large headache in getting the property to break-even but if they left 25% for current management as an incentive and kept the firm autonomous perhaps the incentives could take care of that headache for the Groupon mothership.

Also attractive about MySpace is that since it was the early leader in social network it does have a very large US userbase. Even the ghost town accounts have some value.

Given the capital markets willingness to value Groupon stock at such a high multiple, buying MySpace for $200m upfront and then perhaps another $100m a year for 2 years to get it to breakeven doesn’t seem that farfetched at all.

  • Interesting idea, but they're ability to do anything with MySpace might be reminiscent of NewsCorps mishandling of it.

  • FoodCircles

    Quite late, but we think this might have been a great idea for Groupon.  Besides, look what it sold for now!

    - Us at FoodCircles

  • Although MySpace still has a user base, Groupon is probably better off just running campaigns across MySpace and targeting users. I don't see how owning a social entertainment/music platform benefits their business. However, I could see Groupon purchasing a local business directory and own additional distribution in that manner.

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