Leaked MySpace Pitch Book Details Precarious Financial Situation
April 15, 2011 at 5:55 PM (PT)
Details of MYSPACE's pitch book to prospective buyers, leaked to TECHCRUNCH.COM, offered a vivid illustration of how far the once-mighty online music site has fallen financially, and what it might take to turn the company's fortunes around. Even the best-case scenario projections offer a company far removed from 2008, when it generated $900 million in revenue.
According to the pitch book, revenue for fiscal 2011, ending JUNE 30th, 2011, is projected to be $109 million against $274 million in expenses, which ends up as a $165 million loss for the fiscal year. Nevertheless, the bean counters at MYSPACE assert that the company will enjoy a turnaround in 2012. Even though they predict revenue will decrease to $84 million in 2012, they claim expenses will fall even further -- from $274 million this year to just $69 million -- to produce $15 million in EBITDA. If that indeed happens, MYSPACE will be profitable.
TECHCRUNCH zeroes in on the linchpin to the turnaround -- cutting $205 million in operating costs over the next 14 months, which could mean massive layoffs on a greater scale than the ones MYSPACE have made the past two years when revenue started shrinking.
The pitch book predicts 2013, 2014 and 2015 revenues to be $101 million, $119 million and $139 million, respectively, but with MYSPACE reportedly losing 14% of its audience every month, it’s hard to reconcile that with predictions of rising revenue.
"It’s extremely unlikely that anyone believes the projections in the pitch book are possible," the report concludes. "Which is why NEWS CORP. is in the unfortunate situation of trying to offload a money vacuum, and will be lucky to be able to even give it away."