The ghost of 'dot-com farting' comes back?

News Corp's acquisition of MySpace seems to be a bargain. However, other media giants should be wary of their spending plans: Web soap bubbles can deflect at any time.

The banker David Hannum once had a famous saying: " An idiot is born every minute ." And what analysts worry about is that media "bureaucrats" are at risk of falling into this unwelcome situation.

News Corp acquired Intermix Media, the parent company of MySpace virtual social network for $ 580 million last year - a lucrative deal that shocked the traditional media industry.

Since the beginning of the year, News Corp's stock price has increased nearly . 20%. The main reason is because the people are extremely optimistic about MySpace's growth potential - the number one address of the current American population.

Watch out for "Remove gold, buy . bran"

News : CNN News Corp's success has forced competitors to squeeze their feet to find a MySpace for themselves, hoping to convince advertisers that "Hey, my public is dead too. tired of movies, music, hi-tech toys . there ".

Media giants are "rushing to find gold" in a gamble that is too risky. They are ready to splash money so they can get over MySpace without knowing that many items are not worth it.

Is there any guarantee that Walt Disney, Viacom and Time Warner will not repeat the mistake that caused many of them from the peak of the dot-com craze to fall into the abyss?

What's more, News Corp has been too sensitive and quick-handed, when no one has thought of owning a MySpace-style virtual social network. Now, other virtual social networks have awakened, sniffing the "hopelessness" of the boys - and there is no reason for them not to scream at the price.

What's wrong, are they holding on? "You don't buy it, let others buy it!", The seller never has his own reason. Everyone understands, the value of Facebook or YouTube is not inferior to MySpace.

Wall Street is whispering that Facebook - MySpace's rival - has just turned down a $ 750 million "bust" offer. Rumor has it again, the boss of this site is pricing in . 2 billion USD.

Each other screams

If any company is willing to buy Facebook (please note that the number of hits lost to MySpace) is more than three times the price of Intermix, it will be the clearest evidence that the media have turned into "desperate idiots." ", as Hannum said. Even the price of 750 million USD is already too high.

Remember that Intermix not only owns MySpace. The company also owns the Grab.com game website and the Alena e-commerce website.

Everyone wants to compete for the young public to advertise.Source: epochtimes

Meanwhile, Facebook is not the only private company that bloggers are talking about. It is also rumored that another British social network, Bebo.com, is being watched by Viacom and Yahoo. And the price - of course, the same thing - for Bebo is $ 1 billion.

According to a recent BusinessWeek article, Digg.com - a website that publishes tech news and "gossip" stories posted by users worth up to $ 200 million, despite sales. The site itself has only . 3 million USD.

This is not a very unusual case. Yahoo's value is 7 times higher than last year's revenue, while Google is up to . 19 times. But the value of Intermix when News Corp bought it was only 7 times more than 2005 revenue. Of course, Digg is an interesting site. But does it compare to MySpace or the two giants Yahoo and Google?

If history repeats

. that would be a bad news.

There is no denying that virtual social networks are very hot at the moment. However, the big media should avoid stepping back into the car trail 5 years ago and do not swing their hands over the forehead for "click".

In doing business, there is never room for the thought "By my sister". Revenue and profit are the prerequisite factors.

In the late 1990s, many major media "felt" a Web portal was needed before the glorious glory of Yahoo, Excite and Lycos.

Walt Disney spent more than $ 2 billion on the company looking for Infoseek, renaming the site to Go.com, but the effort failed miserably and Disney was forced to close most of Go.com after 2001. Now, all Infoseek's remnant is only a link to Disney's "branch" websites.

Then, because he did not want to lose to his rival, NBC's General Electric bought a stake in Xite.com and Snap.com Web portal in a deal worth up to $ 4 billion. After that, NBC Internet was allowed to sell securities, with half of the shares held by NBC. What had come had to come, NBC Internet fell into the air and NBC was forced to spend 50% of the remaining shares for $ 85 million.

And is it necessary to recall the merger of "catastrophe" between Time Warner and AOL, when everyone knows its bad outcome?

Of course, part of the reason these acquisitions failed was because the dot-com craze fizzled and the economy fell into recession. Many people will protest that in the current context, the situation may be different.

But there is one lesson everyone needs to remember: The online advertising market is very exciting, but it is still an advertisement anyway. But advertising is always a booming business sector when the economy is gloomy.

It is possible that the global economy will not recession like in 2001, but if idiots continue to "buy gold to buy bran" and rely on advertising money when the economy begins to show signs of slowing down, things Can that lead to a second fart fever?

And finally, again, regardless of the hype of Web 2.0, there has not been any virtual social network "on the stock exchange". If YouTubes, Facebook and Bebo are confident that they own long-term, attractive and feasible business models, why don't they try to sell securities like Google?

The answer can only be because these firms themselves also understand that " The level is temporary, the class is forever ".

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