Rupert Murdoch took a swipe at
MySpace rival Facebook Thursday after News Corp. reported weaker-than-expected sales at its Fox Interactive Media unit, which consists mainly of MySpace. FIM online ad revenue during News Corp.'s
fiscal third quarter ending Mar. 31 dropped 16% while the unit's revenue overall fell 11% to $187 million.
In its earnings press release, the media giant attributed the decline in
FIM operating results to lower ad revenues combined with increasing costs related to MySpace Music, its joint venture with the major recording labels.
Asked about the 16% dip in FIM advertising
during the Q&A portion of News Corp.'s conference call, Murdoch predicted growing traffic under new digital chief Jonathan Miller before training his fire on MySpace's nemesis:
"We are not going
for the Facebook model of bringing hundreds and hundreds of millions of people who don't bring any advertising with them at all," he said. The immediate question that comes to mind is 'Since when do
media conglomerates shun having audiences of hundreds of millions of people?'
On further thought, the remark seems to be a veiled reference to Facebook drawing 70% of its 200 million strong
user base from outside the U.S., while most MySpace users are in the U.S. The inference: it's easier to monetize traffic from the dominant U.S. ad market than that coming from international markets.
Indeed, MySpace has long enjoyed an audience advantage over Facebook in the U.S. even though Facebook overtook its rival globally a year ago. But Facebook is closing in on MySpace on its home
turf and could dethrone the News Corp. property as the top social network in the U.S. in the coming months.
Facebook added about 4 million unique visitors in March to reach 61.2 million and
close within 9 million of MySpace, according to comScore. And while MySpace's audience of 70.2 million has contracted by 4% in the last year, Facebook's has surged 72%.
Certainly, MySpace is
still well ahead of Facebook in revenue. In News Corp.'s last fiscal year ending June 30, FIM generated more than $800 million. And market
research firm eMarketer estimated Facebook had U.S. ad revenue of $210 million compared to $585 million for MySpace in calendar year 2008.
But with MySpace's three-year $900 million ad deal
with Google is due to expire in mid-2010 and Google earlier this year expressing disappointment with efforts to monetizing social network inventory, it's not a sure bet that relationship will
continue.
Falling revenue aside, Murdoch Thursday boasted of MySpace's profitability. "Profitability, I must say, that has completely escaped our competitors," he said.