Speaking of Independence Why Doesn't MySpace Stand Alone Inside News Corp?

(PaidContent.org)  This story was written by Staci D. Kramer.

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Judging by my inbox, I startled some people when I asked News Corp's Rupter Murdoch and Peter Chernin during Wednesday's earnings call why MySpace, which operates independently in nearly every way, is still part of Fox Interactive Media (NYSE: NWS). I didn't ask the question very elegantly but, to his credit, Chernin didn't brush it aside. A quick history lesson: Intermix, the parent of MySpace, was the first acquisition of just-launched Fox Interactive Media back in July 2005. It was quickly followed by other acquisitions but MySpace remains the anchor tenant, providing by far most of the unit's revenue.

Chernin described FIM as "largely just a corporate construct to organize some of our holdings and to help us manage them" efficiently but stressed "MySpace is run independently. It now sells its ads independently, builds its features independently. And you know, we organize our businesses in what we hope and trust is the most efficient way possible." He added, "MySpace, we've said repeatedly, is clearly the dominant revenue generator but there are important other businesses inside of there, whether it's IGN, which is growing nicely, Fox Sports, which is a leader in sports, Photobucket, et cetera.

As for keeping MySpace and FIM intertwined, Chernin said he doesn't see "any negatives" to MySpace being organized inside FIM and that there are "some benefits in terms of joint buying of technology, joint buying of spectrum investments, etc. ...  utilizing of some corporate staff and function. So we think it's organized well and we will consistently keep an eye on it."

Decentralizing ad sales:  Despite the transition phase, Chernin said decentralizing ad sales at FIM should accelerate, not hamper, revenue growth: " it allows those people who are in product development to be essentially next door to the people who are responsible for monetizing those developments. And essentially what we were looking to do was cut out a layer in between."


By Staci D. Kramer