February 3, 2011

For Sale: One Slightly Used Social Networking Giant

Rupert Murdoch's News Corp. is exploring a sale or other "strategic options" for Myspace, the former social network giant which has been eclipsed by Facebook in recent years, AFP reports.

News Corp. chief operating officer Chase Carey said during a conference call with financial analysts to discuss News Corp.'s second quarter earnings, "We recognize that the plan to allow Myspace to reach its full potential may be best developed under a new ownership structure and we're evaluating those strategic alternatives. With a new content focus and structure in place we believe now is the right time for News Corp. to consider strategic options."

"It could be a sale. It could be a new investor coming into it. It could be us staying in with a restructuring," said Carey, who put Myspace on notice in November saying the losses at the social network were "unsustainable."

"The interest to date ranges from A to Z: industry players, financial players, foreign to domestic," Carey said. "It's incoming. We're not soliciting anything."

Earlier this month, Myspace announced it was cutting some 500 jobs, nearly half its staff. While Facebook has grown to more than 500 million members, Myspace's numbers have dwindled. Carey said there was an "early window" on a decision for what to do with Myspace, purchased for $580 million in 2005. "It's something you'll see in the first half of the year," he tells AFP.

Myspace and other digital investments continue to drag on News Corp.'s results. News Corp. said net profit rose over 150 percent to $642 million in the second quarter of its fiscal year on a strong performance by its television holdings. The company, controlled by Rupert Murdoch, recorded a $275-million impairment related to its Digital Media Group in its second fiscal quarter ended Dec. 31, reflecting the reduced value of assets.

Revenue was up slightly, rising to $8.76 billion from $8.68 billion in the same period a year ago. Earnings per share of 29 cents were better than the 28 cents per share forecast by Wall Street analysts.


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