Considering digital media doesn’t even warrant its own line item in News Corp.’s earnings reports, Chairman and CEO Rupert Murdoch and his phalanx of senior execs sure spent a lot of time talking digital up during the company’s Q2 and fiscal year-end investor call late yesterday.
The company’s Fox Interactive Media (FIM) division, grouped with outdoor media and digital pay TV in the company’s “other” bucket, achieved fiscal-year profitability for the first time with the close of Q2 2007. FIM’s revenues for the quarter doubled from the year-ago period to approximately $183 million, while operating income climbed to $30 million. For the full year, the digital unit earned $10 million in profit on $550 million in revenue.
In comments during the call, Murdoch said revenues would go much higher, virtually doubling in fiscal year 2008. “We would be surprised if FIM revenues this fiscal year do not exceed $1 billion with margins well above 20 percent,” he said, adding News Corp. expects MySpace alone will generate $800 million in the coming fiscal year.
President and COO Peter Chernin said digital revenue growth will be about half attributable to the company’s new relationship with Google, “because not that much of the Google deal was actually in fiscal ’07.” The other half will stem from the rest of the business, including organic growth from page views and improved targeting “to significantly increase our ECPMs on the business.” Chernin added the company has seen strong international growth in digital in the U.K., Australia, Canada, Germany, Spain.
Across the company’s newspaper sites, including those in Britain, Australia, and the U.S., the company’s self-reported audience growth was 25 percent, bringing its unique audience count to 20 million. The newspaper properties drew $100 million in revenue, Murdoch said, while FOXNews.com revenues grew 50 percent and station-owned and operated Web destinations grew their unique audiences by 350 percent, “although from an admittedly small base.”
News Corp. reported overall net income for the period ended June 30 was $890 million, a 24 percent increase over the year ago period. Fiscal full-year net income was $3.4 billion, a 22 percent increase.
Murdoch described changes in the digital media landscape as “the single most important challenge we face today.” He said the company had recently hosted a four-day digital conference during which he exhorted the company’s executive management and its digital advisors to “unearth, examine and implement” digital strategies to further boost News Corp.’s bottom line.
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