NewsCorp flags offloading MySpace
- — 03 February, 2011 14:15
News Corporation has confirmed it is considering offloading its struggling social networking website MySpace.
NewsCorp chief operating officer Chase Carey says the company was looking at a "new ownership structure" for the website, which recently announced it would cut 500 jobs worldwide, roughly half its workforce.
While a recent revamp of the site towards a more music and entertainment focus had met with a positive response, MySpace continued to post losses according to News Corp's second quarter results released on Thursday (AEDT).
"With a new content focus and structure in place, we believe now is the right time for News Corp to consider strategic options for this business," Mr Carey told analysts and media during a conference call on Thursday (AEDT).
"The new MySpace experience has been very well received by the market and we have some encouraging traffic metrics in the last several weeks.
"However, we recognise that the plan to allow MySpace to reach its full potential may be best developed under a new ownership structure and we are evaluating those strategic alternatives."
NewsCorp took a $US275 million pre-tax goodwill impairment charge for MySpace in its second quarter results, released on Thursday (AEDT).
Mr Carey described MySpace as a business with a "unique level of reach" and one with a "real future to it".
"We think it has an opportunity to really be something special but we think we ought to put it in the right place to really maximise that opportunity," Mr Carey said in response to a question.
While Facebook had in excess of 500 million members, industry figures suggested the number of monthly visitors to MySpace was about 54 million towards the end of last year.
NewsCorp paid $US580 million ($A576.03 million) for MySpace in 2005, but the site had struggled to match the subscriber growth of Facebook in recent times.
Mr Carey said there had been "a lot of interest because there has been some indication we are pursuing this path". Options included a sale, an investor coming in, or NewsCorp "staying in with a restructured ownership structure with management", he said.
"We think a fresh perspective would give them flexibility and opportunity to really get a new life consistent with the relaunch of the product and the right sizing of the cost," Mr Carey said in response to a question.
"The interest to date has ranged from A to Z, from industry players, financial players from foreign to domestic."
Second quarter results showed NewsCorp's "Other" segment, which covers MySpace, reported an operating loss of $US156 million ($A154.93 million), $US31 million ($A30.79 million) more than a year ago.
"This decline was primarily due to increased losses at the Digital Media Group, stemming largely from lower search and advertising revenues at MySpace," News Corp said.
