Speculating on the reasons that News Corp (NYSE: NWS) bought out Intermix (AMX: MIX), with their hot social networking website, My Space. Robert Young speculates that Murdoch & Co., may be preparing to launch a competitor to MTV, owned of course, by Viacom (NYSE: VIA):
Much like Viacom’s CBS decided to use the broadband web to bypass cable and compete against the 24-hour news networks like CNN and FoxNews (see PaidContent’s coverage here), the acquisition of MySpace positions Murdoch to challenge the dominance of MTV in their category. I’m willing to bet that he will go even further by eventually extending the MySpace brand to include a dedicated cable & satellite network/channel. He is after all an old media guy.
In fact, just a couple of weeks before News Corp. announced the deal,
we all witnessed the web’s potential in this context when AOL’s
webcasting audience for Live 8 outreached MTV and ABC’s ratings of the
same event (details here.) Such a data point can go a long way towards justifying a $580 million price tag.
Can he pull it off? It's reasonable to be skeptical that the company that owns Fox News could rebrand itself to appeal to a hipper/younger demographic, but I'd be worried at MTV. The flagship music video channel has gotten quite stale and it doesn't have the cache it once did. Besides, we were skeptical that Fox News could do any damage to CNN when that came out. It did.