Speaking at McGraw Hill's Media Summit conference Thursday, Murdoch told an overflow crowd that MySpace had grown more quickly than News Corp. executives had expected since its acquisition in 2005. "We've had to almost put the brakes on it," he said, explaining that the surging traffic had strained the company's servers.

The social site's booming growth has also quickly driven up ad revenue. MySpace currently brings in $25 million a month, and is growing at a rate of 30% each quarter, according to the News Corp. chairman. While touting MySpace's rapid inroads into online video over the last year, he expressed some uncertainty about video advertising. "If you interrupt that flow of video with commercials, they'll be up and off somewhere else very quickly," he said. "But we're following it very closely."

Murdoch dismissed criticism that the MySpace audience was aging, giving an advantage to rivals such as college social networking site Facebook. "A lot of young people--college kids, undoubtedly--are going to Facebook. But that doesn't mean they don't stay with MySpace," he said.

Regarding News Corp.'s other major digital acquisition, gaming information network IGN, Murdoch acknowledged that the property it bought for $650 million in 2005 isn't growing as fast as MySpace, but said it still managed to double traffic and page views during the last quarter. He also noted that the recent releases of the Sony PlayStation 3 and the Nintendo Wii had given the site a boost. "So we're pretty happy with it," he said.

Murdoch estimated that revenue from MySpace, IGN and other digital properties could reach $1 billion in News Corp.'s next fiscal year, which ends in June 2008.

Market research firm eMarketer predicted in a report last November that MySpace alone would have $525 million in ad revenue in 2007. The firm's projection that Internet ad spending will reach 8.1% of overall media ad dollars in 2008 also roughly coincides with Murdoch's estimate that News Corp.'s digital sales will account for about 10% in five years.

An analyst from investment bank Piper Jaffray also said Thursday that the firm expects the Internet to account for around 10% of all ad spending within five years.

Looking ahead, Murdoch was especially optimistic about the company's push into the mobile arena. "The telephone is the next great entertainment platform that is coming," he said. "All the telephone companies are looking for content to sell because they see the price of voice is going down and down, and we think that there's a huge opportunity for us."

In particular, Murdoch pointed to the company's deal with Cingular to offer a mobile version of MySpace for an extra $3 a month that allows users to upload photos taken on handsets to their profiles and respond to MySpace e-mails. He said that 200,000 subscribers had already signed up for the service since it was launched in December.

News Corp. reported better-than-expected results on Wednesday as its second-quarter net income fell to $822 million, or 26 cents a share--from $1.08 billion, or 33 cents a share, a year ago. The company got a lift during the quarter from its film business, which had hits including "Borat" and "Night at the Museum."

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