News Corp. Not Resting on MySpace Laurels, Execs Say
Rupert Murdoch, Peter Chernin talk up MySpace growth and ad innovations during company's earnings call.
Increasing MySpace’s market share and profitability remains major priorities for News Corp. Those were the top themes Rupert Murdoch and his lieutenant Peter Chernin hammered away at during a call discussing the company’s fiscal first quarter earnings.
In comments that seemed partly a response to complaints the company fail to innovate around MySpace and its associated ad products, Murdoch and Chernin said the company is hot on the tail of various monetization plans. These include growing direct sales at Fox Interactive Media (FIM) and rolling out a self-service ad system geared toward small businesses. They added the company’s year-old search and ads agreement with Google has already surpassed Google’s expectations.
FIM revenues were $188 million, an 80 percent increase over the year-ago period, and operating income was $4 million. Chernin said slightly less than a third of that revenue came from search, with the rest divided between display and performance advertising. Ad network sales still represent a sizable chunk of display revenue.
“We are generally the largest supplier of inventory to almost every ad network because we have so much inventory,” Chernin said. He insisted that’s changing. The bulk of revenue now comes from direct sales of premium inventory, and News Corp. is generally hiring up in the area. Budgeting for this year allows for considerable expansion of sales staff, and Chernin said goals and quotas will rise as well.
Surging social net Facebook was the visible elephant in the room during the earnings call. Murdoch discussed the red-hot competitor in frank terms, dismissing it as a threat to News Corp.’s dominance in social media.
He said the competitor’s faster rate of growth belies slower growth in actual terms, as MySpace adds 300,000 new users globally every day. (Earlier this week, Mark Zuckerberg said Facebook adds 250,000 new users daily). Murdoch also claimed Facebook’s unique user count and page views are only 45 percent and 33 percent of its own, respectively.
“There’s been a lot of chatter lately about MySpace’s ability to maintain its leadership position in the evolving world of social networking and its ability to truly monetize its vast audience,” he said. “I am more convinced than ever that any fear is misplaced.”
MySpace this week announced a new self-serve ad product geared toward small business users and an expansion of its HyperTargeting platform for display ads. Chernin said the self-serve platform will be available within 30 days.
He also sought to put to rest rumors that MySpace’s search and ads deal with Google haven’t performed well to date. “This whole deal is now profitable for them,” he said. “They are running ahead of their modeling and ahead of their projections when they made the deal.”
Revenues for the company as a whole grew 19 percent to $7.1 billion during Q1, while net income fell 13 percent to $732 million.
