Peter Kafka

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Murdoch: We’re Not Giving Up on MySpace Yet

Not as much news to chew on from today’s News Corp. earnings call. Perhaps that’s because News Corp. CEO Rupert Murdoch didn’t talk as much as he normally does. Murdoch lieutenants Dave DeVoe and Chase Carey handled the bulk of the call, and their boss chimed in occasionally during the Q&A.

It’s also possible that there was some great stuff there that I missed; my efforts to liveblog today’s call were marred by technical snafus and operator (i.e., me) error.

Still. some nuggets:

  • Murdoch reaffirmed his company’s interest in overhauling MySpace, even though its Google (GOOG)  deal is about to expire, and even though the unit it is still losing money as ad revenue and search dollars dwindle. “We will see it out for some time yet”, he says.
  • Mobile, though, is another story. News Corp. took a $217 million charge on its outdoor and mobile businesses, and Carey confirmed an open secret — the company is trying to sell its Jamba unit.
  • Murdoch continues to love the iPad. He thinks the Apple  (AAPL) device will be joined by others and that worldwide we’ll see “hundreds and hundreds of millions” of these things in use. Like other content-makers, he thinks it’s “gamechanger” for his business.
  • Murdoch didn’t have a lot to say about his efforts to command users to pay for his stuff online. Asked specifically about Hulu and other video options (News Corp. is a co-investor in the site), he was mum. But Carey made noises about making sure News Corp. didn’t give away valuable content online. So draw your own conclusions there.
  • He says a boycott of Glenn Beck’s Fox News show has had zero impact on the show’s revenue: “They don’t boycott watching it. We’re getting incredible numbers”.
  • And the big news. Fox is “very close” to announcing new judges for “American Idol.” And next year’s show will be an upgrade, Murdoch said. “It will be better. The music will certainly be better.”



How did News Corp. do in its most recent quarter? Good question! The company is reporting earnings of 33 cents a share, and the street was looking for 20 cents.

Good, right? But that 33 cents number includes a bunch of one time gains, which are only partly offset by one-time charges. And if the company has explained exactly how much impaact those charges had on profits, I’ve yet to see it. UPDATE: The adjusted number is 30 cents — but that also includes 12 cents of “non-cash tax benefits related to recognition of certain prior year tax credits”. So make of that what you will.

That said, we can say with authority that the company recorded revenue of $8.1 billion, which is in line with the consensus. I’ll obviously update the EPS number when I can.

Barclays media analyst Anthony DiClemente provided us with nice overview of revenue and operating earnings expectations, so if you’re so inclined, you can see how News Corp. (which owns this Web site) matched up on a unit-by-unit basis.

As always, the real fun begins when Rupert Murdoch gets on the speakerphone for the earnings call, because Murdoch more or less says what’s on his mind, which means he tends to generate actual news. And even when he’s on script, the output can be interesting. Last quarter, for instance, he announced that News Corp. would be announcing a new digital news subscription service within a few weeks. Haven’t heard about it (on the record) since, but I’m sure someone will ask today.


Kicking off with statement from CFO Dave DeVoe. I’ll skip most of this because most will be contained in release itself.

If I heard DeVoe correctly, he’s saying the 33 cents number is net of one-time charges and gains. I’ll try to confirm.

FYI: Don’t believe Murdoch will be delivering any opening remarks, which is a bit unusual for him.

14% increase for WSJ.

More losses at MySpace, decreases in search, ad revenue.

Onto Murdoch lieutenant Chase Carey

Carey confident about broadcast, cable ads.

“Not going to speak about each of our businesses”. That said: Movies were great. Hooray for Avatar! Same for TV studio. Hooray for Modern Family and Glee!

On digital: We’re ahead of the curve on pricing movie rentals, streaming movies

Cable channels have lots of growth ahead of them, especially internationally. Shout outs for Fox News, National Geographic group, etc. “It is a fabulous business”, and I think it’s undervalued.

Broadcast is great, too, but “it simply has a lousy business model”. Ie – cable guys don’t pay us for it. But they will! (See: CBS/Comcast)

And satellites! Those are great, too! (outside of the US, where we got out of that business, which is why I’m reading this statement right now).

On our bid to buy rest of BSkyB: It’s a great plan. You guys will love it. But we’re not going to overpay, because “we have other options for our cash”.

Print business have “exciting opportunities to grow”.

Not mentioned anywhere yet. “Web” or “Internet”.

OK, off to Q&A. Investors first, then press:

Chase, are you really taking a salary cut?

Yup, taking less cash and trading it for longer-term performance-based comp.

Dave: What are your advertising assumptions?
Rupert: What’s your take on economy in general?

DeVoe: [Sorry, couldn’t hear]

Murdoch: Economy remains very fragile, particularly in the West, but we have “almost inexplicably good advertising and great confidence there”. But we shouldn’t be over-confident.

Chase: Please talk about Fox News affiliate pricing. Will next round of deals take as long as the ones you just finished.

Carey: Sorta.

Ah, good. A professional analyst confused by normalized EPS as well. So what’s the adjusted number?

30 cents. But included in that number is a tax benefit. ?

[Sorry, juggling a couple things here.]

Please comment on M&A opportunities. Sports teams? What’s going with Jamba and MySpace?

Murdoch: “We will not be buying any sporting teams… we’re in the business of buying sports rights.” Won’t talk about Jamba (which is for sale). Re: MySpace — “it will look very very different” in the next few months and “we will see it out for some time yet”.

Carey: Acknowledges that Jamba is indeed for sale (Allen is handling, I believe)

Update on paywall strategy please:

Murdoch: UK Times paywall going well, but we won’t release numbers yet. Re: iPad, other tablets. “I believe it is a gamechanger altogether” because “young people” will be reading papers on the devices. (Hrm.)

Ruhroh. Either tech problems with entire call or my PC but can’t hear call now. Will try a new browser…

OK. Back on (thanks Chrome!)

Rupert: You want to get paid for online content. How will that work for TV shows, Hulu, etc?

Murdoch: “We will pushing very hard on VOD.” Re: Netflix, Hulu, etc. “These new businesses are under constant review… and I won’t say any more on that for the moment.”

Carey: In general, want to move toward dual-revenue stream business, and maintain windows, and I think in the past, some of our decisions have been “rushed.” (Translation: Not a Hulu fan).

Press Q&A:
Something about Australian politics. Skipping.

Update on MySpace search contract, which expires end of this month?

Carey: We’re talking to parties. Not going to say much. We don’t get same deal we got before, obviously. But you’re right, it is imminent.

Fellow Murdoch employee Shira Ovide has question about mobile and tablets. Replicate existing content or create new stuff?

Carey: Devices have transformed expectations about value. Gives you richer experience, etc. WSJ on iPad a very different experience than on a PC. Really starts to deliver on promise of multimedia… For us, opportunity to “intelligently” exploit our assets. “Actively engaged in ways to exploit an array of ways” to do so.

Murdoch: I already said game-changer. So I’l say it again. I think we’ll “hundreds of hundreds of millions of these devices” all around the world. And as they evolve, we’ll have to evolve presentation.

Shira wants them to comment on reports of a new unit devoted to tablets. They won’t bite.

What does News Corp. think about new American Idol judges?

Murdoch: “Very close” to announcing to new judges. Active negotiations. Next year’s idol will be different. “It will be better. The music will certainly be better.”

@brianstelter wants to know about Glenn Beck boycott…

Murdoch: “They don’t boycott watching it, we’re getting incredible numbers”. No effect on revenue, profits.

And that’s it. Apologies for scattershot effort today.