Business analysts at J.P. Morgan Securities reacted to the Last.fm acquisition by saying CBS is paying less than $19 for each of the site’s 15 million unique visitors.
That is less than $35/unique visitor that News Corp. paid for MySpace.com a few years ago.
“The deal appears a little pricey based on its current run rate,” they wrote of the $280 million price tag, “as we estimate the company is generating under $10 million in annual revenues and will likely not reach break-even until sometime in 2008.”
But they believe that “though small, the property should enhance CBS’ digital/online growth rate. Despite being more of a fit for CBS Radio, Last.fm will become part of CBS Interactive and thus will be reported in CBS’ television segment. As Last.fm continues to grow its user base and revenue opportunities, it should boost CBS’ digital revenues and help accelerate its growth rate.”
