Viacom chairman Sumner Redstone stunned the entertainment industry in 2006 when he fired CEO Tom Freston. One of the chief reasons for the move was that Freston hadn’t moved decisively enough to buy MySpace, enabling Rupert Murdoch to pick up what was then the most popular social networking site for $580 million. Redstone seemed to think that contributed to the 20% drop in Viacom’s stock price in 2006 up to the date of Freston’s ouster. The CEO’s successor, Philippe Dauman, would “never, ever let another competitor beat us to the trophy,” Redstone told analysts. Redstone told interviewer Charlie Rose that losing MySpace had been “humiliating,” adding, “MySpace was sitting there for the taking for $500 million.”

But who’s laughing now? MySpace has collapsed into a distant also-ran behind Facebook and Twitter. And Murdoch took a bath on MySpace this week. He wanted $100 million for it but sold 95% of his interest to ad company Specific Media for a mere $35 million. Just imagine what would have happened to Viacom’s stock if Redstone’s passion for chasing fads led him to outbid Murdoch. It’s hard to believe that the owner of MTV would have seen what Murdoch didn’t — that social network fans were being turned off by MySpace’s tawdry commercialism as it established itself as a music and entertainment portal. That provided the opening for Facebook and Twitter to position themselves as safer alternatives for people who simply want to connect with friends.

Of course Redstone’s attack on Freston for losing MySpace was probably just a cover for the fact that Viacom’s chief shareholder has long been fearful of powerful underlings. He also gave the boot to Frank Biondi and Mel Karmazin — and has feuded with his daughter Shari and son Brent. Still, this week’s paltry sale price for MySpace shows that Freston was right and Redstone was wrong. Freston’s travelling and unable to comment on the MySpace sale, but he told CNBC in April that he’s “still waiting for Sumner Redstone to send him a thank-you note.”

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