Myspace photobucket acquisition

It appears the News Corp (through MySpace) is acquiring photobucket - it has not been officially announced as yet but the price is said to be between US$250m - US$350m [presumably details will become clear in time].

A few thoughts:

- a good defensive acquisition; there is a huge crossover of users and this enables tight integration between the services

- the acquisition will cement News' interactive properties as a leading web desination; photobucket has a huge number of enthusiastic users

- if photobucket's video service expands then this could significantly reduce myspace's reliance on youtube for videos

- nevertheless it will not deliver significant 'present day' revenue to News Corp; and US$250m+ is a significant sum to pay simply for 'eyeballs' and 'integration'

- it is worth remembering that $250m+ is getting towards half of what News paid for MySpace and its associated businesses a year ago... with at least 2 implications (both of which are probably reasonably obvious):
* MySpace is now worth very substantially more than News paid for it;
* Web acquisition valuations are presently looking very very stretched by any traditional valuation methodology. And last time traditional methodologies were thrown out the window it turned out very badly for all concerned [except for vendors who were paid in cash or who promptly converted their shares to cash].

My solution (one which I believe News Corp has specifically rejected) is that News should sell a signficant minority stake in its online division, either to private equity or via a stockmarket float. This would validate the valuations (if this were thought to be useful) and would also provide a huge warchest [of other people's money!] to be used to further build the division.