After spending $580 million in 2005 to buy MySpace, executives at News Corp. thought they were in post position to dominate the fast-emerging field of social networking. And for a while they were. But then Facebook got its game on and now attracts more than twice as many users as MySpace each month.
Now things seem to reaching a head. A few weeks ago, News Corp. President and COO Chase Carey described MySpace as a "problem." And just in case potential bidders didn't get the hint, the company's chief operating officer today said that News Corp. was open to a sale or partnership. In a Reuters interview, Chase Carey said:
"There are opportunities here to do 20 things (with MySpace) but that doesn't mean you're going to do any of the 20. If there's something there that makes sense you ought to think about it."
In its most recent quarter, which finished on Sept. 30, News Corp. said that its "other" business segment, which includes MySpace and the rest of the Digital Media Group, suffered a $156 million operating loss, some $30 million more than it did a year ago. The chief culprit: lower search and advertising revenues at MySpace. News Corp. recently overhauled MySpace's website in an effort to induce its mostly young audience to consume more music, videos and celebrity gossip.
But the pressure is on. Carey indicated that the proverbial corporate clock was ticking - and that he expected MySpace to return to the block in a hurry.
"I'm not going to break down (the number of) quarters," he said. "It's not years ... We need to deal with this with urgency."
It's unusual to hear a corporate insider speak in public so bluntly about getting rid of one of a company's properties. But the news follows a drumbeat of gossip among media industry watchers about an inevitable parting of the ways between an old media outfit that paid a pretty penny in hopes of getting a hip new media property - when it was still hip.