By Yi-Wyn Yen
In the aftermath of the Yahoo and Microsoft dust up, News Corp. says it is staying out of the mess.
News Corp. (NWS) had previously been linked to Yahoo (YHOO) and then switched camps to join Microsoft (MSFT) in its pursuit to acquire Yahoo. Microsoft eventually went it alone and four days ago, the behemoth walked away from its $47.5 billion offer with plans to look into alternatives to beef up its online ad unit. News Corp., which owns social networking site MySpace, shot down any rumors that it will partner with Microsoft.
“We’re not in discussions with Microsoft. There are no discussions,” said Peter Chernin, chief operating officer of News Corp. during an earnings call Wednesday with shareholders.
Chernin said that the company holds “regular conversations with everyone in the space,” but has not held any talks with Yahoo or Time Warner’s AOL (TWX) in the last “couple weeks.” Added CEO Rupert Murdoch, “Nor have I.”
In an effort to stave off Microsoft’s unsolicited bid, Yahoo said it was pursuing other deals like partnering with AOL or Google (GOOG). At one point, Yahoo also considered a tie-up with News Corp.’s MySpace. With its massive and highly-engaged audience, a MySpace partnership was seen as way to attract advertisers and help bring economies of scale for either Microsoft and Yahoo. Though Microsoft has a minor stake in Facebook, neither have developed a major social networking presence.
MySpace may generate millions of page views and visitors to its site, but it continues to struggle with growing its sales. News Corp’s Fox Interactive Media, which includes MySpace and other online properties like gaming site IGN and photo-sharing site Photobucket, will miss its $1 billion revenue target for its 2008 fiscal year that ends June 30. Chernin said the company will fall short of its projections by 10%.
Fox Interactive relies on online advertising to generate revenue. MySpace, which makes up the bulk of Fox Interactive’s revenues, generated $66 million in its fiscal third quarter from an ad-sharing deal with Google.
Chernin explained that there’s a learning curve to make money off of social networking sites. “Social media has only been around for a few years,” he said. “It’s still difficult to quantify the economic value of a friend. We’re working with major brands and agencies to educate and experiment with social media.”
Fox Interactive is still in its growing phase, Chernin said. “We will continue to invest. We’re already invested in [third-party] applications, MySpace Music, and new development tools for the homepage,” he said. “It’s too soon to be milking for margins right now. We need to focus on growth.”
