Rupert Murdoch’s $580M Gamble — The Deal That Changed Everything

On July 18, 2005, News Corporation announced it would acquire Intermix Media — and with it MySpace — for roughly $580 million.

You did not notice. Your profile song still played. Your Top 8 still ranked. The only visible change was nothing at all, which was deliberate, and which is why almost nobody who lived through 2005 on MySpace can tell you what happened that summer.

The deal itself

The transaction was structured as a cash acquisition of Intermix Media, the renamed eUniverse, at $12 per share — about $580 million in total. The filings are public and dry and worth reading precisely because they are dry: this is the moment a teenage subculture became a line item in a media conglomerate portfolio.

MySpace was folded into Fox Interactive Media, News Corporation’s newly formed digital division. Chris DeWolfe stayed on as CEO. Tom Anderson stayed on as president — and, more importantly to the millions of people who had him in their friends list, stayed on as Tom.

Why Murdoch bought it

The conventional read at the time was that News Corp had overpaid for a fad. The more interesting read is that News Corp bought exactly the right thing for exactly the wrong reason.

What MySpace had was attention at a scale no television property could match, held by an audience television was structurally failing to reach. What News Corp knew how to do with attention was sell it to advertisers. On paper the fit was perfect.

Analysis: $580 million looks like a bargain from here — within a year the Google search and advertising agreement alone was reportedly worth around $900 million over three years, and MySpace was being valued in the billions. But the price was never the mistake. The mistake was buried in the logic of the purchase: News Corp bought an audience, not a product. Audiences get monetized. Products get built. Every structural problem MySpace had by 2008 — ad density, page bloat, feature stagnation, an infrastructure that could not keep up — traces back to which of those two things the owner believed it had acquired.

Tom, after the deal

Anderson remained MySpace’s president and strategic voice until 2009. His public role — the default friend, the face in the white t-shirt — outlasted his actual authority by years. Reporting from the period, most thoroughly in Julia Angwin’s Stealing MySpace, describes an increasingly difficult relationship between the founders and their corporate owners as the pressure to hit revenue numbers intensified.

The friend count kept going up. The influence did not.

What 2005 felt like from the inside

It felt like winning. MySpace was the internet’s cultural center of gravity, the place where bands broke, where scenes formed, where a Top 8 reshuffle was news. The platform was months away from passing Google and Yahoo in U.S. visits.

Nobody on the site knew that the ownership change was the hinge. That is generally how hinges work.

Why this matters in 2026

The 2005 acquisition is the most-cited cautionary tale in consumer internet, and it is usually told as a story about a legacy media company failing to understand the web. That version is too flattering to everyone involved.

The sharper lesson is about incentives. MySpace did not decline because it was sold. It declined because the thing it was sold for — monetizable attention, this quarter — was in direct conflict with the thing that made it worth buying — a platform people wanted to spend their evenings building on.

When today’s owners describe a relaunch that is less algorithmic and less optimization-driven, this is the year they are implicitly arguing with. Not 2011, when MySpace sold for a fraction of this price. 2005, when it sold for $580 million and quietly stopped being built.