Global profits at Murdoch’s media empire jumped by $1.8bn to $2.7bn, a hefty $1.7bn of which came from the transfer of its stake in DirecTV to Liberty Media. Elsewhere Dow Jones delivered a $21m profit and, on this side of the pond, its newspaper arsenal experienced double-digit growth.
But the headlines weren’t so happy at MySpace, Murdoch’s flagship digital venture. News Corp revealed that its Fox Interactive Media arm, which includes the social networking site, will miss its goal of an 80% increase in revenue, to a possible $1bn, by ‘about 10%’. Which is a bit of a kick in the clicks. According to News Corp’s chief operating officer, Peter Chernin, advertisers are still struggling to judge how much of a buck there is to be made from this kind of site. ‘It’s still difficult to quantify the economic value of a friend in the social networking space,’ he said. [As for the social value of such a friend, the jury’s still out too].
None of which does much to boost Murdoch’s digital record. While his nous with print media is second-to-none, his digital touch has so far been found wanting. Star TV has done okay, but this is largely down to Murdoch's digital-savvy son James. And with junior being primed to take the helm, News Corp may well be able to stride into pixel-land with greater confidence. That said, the issues around MySpace show that fundamental questions still surround social networking in general.
Not that investors seem to be deterred. For now all the big sharks are still circling, just waiting for the potentially mouth-watering profits to be let out the cage. Over at Facebook, MySpace’s main rival, Microsoft was today reported to have approached founder Mark Zuckerberg about a possible acquisition. This is after its $47.5bn takeover talks with Yahoo! came to nothing on Saturday. Bill Gates’ outfit already has a $240m stake in Facebook. Meanwhile back in March, Li Ka-shing, the Asian uber-investor, doubled his stake to $120m. All of which helps the site’s claim to be worth $15bn.
News Corp maintains that MySpace is the most powerful of the social networking sites; in the US, it claims 73 million regular users, compared to Facebook’s 36 million. But this doesn’t mean much if they can’t turn usage into dollars. If they can’t convince advertisers of the value of the model, they’re not going to get anywhere.