Friday, February 09, 2007

News Corp's MySpace Acquisition Now Looks Like a Bargain

Many scoffed at News Corp when it purchased MySpace and other Intermix-related properties for $580 million in the summer of 2005. But, Rupert Murdoch is smiling from ear to ear now, as that acquisition now looks like a good old-fashioned new media bargain.

On Wednesday, News Corp announced its most recent quarterly earnings and MySpace (and its parent division, Fox Interactive Media) were the stand-out performers.

First, MySpace is now profitable and its sales tripled on a year-over-year basis (accounting for $75 million in revenues in the quarter ending December 31). Second, despite the fact that senior executives generally are conservative on forecasting future revenues, News Corp President Peter Chernin assured analysts that Fox Interactive Media would "over deliver" on the $500 million annual revenue number projected 3 months ago, adding that the division's operating profit margin should exceed 20% in fiscal year 2008. Chairman and CEO Rupert Murdoch even more boldly called those estimates to be "pretty pessimistic" and added "I think we can do a lot better than that."

MySpace's registered user base is now reported to be 150 million ... 151 ... 152 ... And, MySpace is now focusing on new ways to monetize its rabid and highly coveted customer base.

EMI May Soon License Its Entire Music Catalog for Online Sales As Unprotected MP3s

As I reported earlier, in the short-term, at least one major label may license its entire catalog of music for online sales in the unprotected MP3 format (i.e., with no DRM) -- and, The Wall Street Journal's Ethan Smith and Nick Wingfield report that EMI is that major label, and that EMI may make a decision on the matter as early as today.

This, of course, would constitute a sea change in the digital music landscape and would put great pressure on the other major labels as well. If, in fact, EMI makes that announcement today or in the next several days, it follows closely on the heels of Steve Jobs music "manifesto" that has caused some consternation on both sides of the debate. Of course, EMI, roiled by continued plummeting sales and resulting turnover in the executive ranks, is in need of major strategic moves.