Despite having recorded a two-fold jump in the second quarter earnings from a year ago, News Corp. seems to be in no mood to carry the load of MySpace. Confirming what has been under speculation from a very long time, the company said on Wednesday that it was in search of a new owner for the social networking site, which has taken many avatars over the past few years.
For the quarter, which ended December 31, News Corp.'s net income rose to $642 million, or 24 cents a share, from the year-ago income of $254 million, or 10 cents a share. The surge has been attributed to the jump in advertising revenue at its Fox Television stations and cable networks. Revenue for the quarter was at to $8.76 billion, up just 1 percent.
I am also pleased with the continued recovery of our U.S. broadcasting business, including our local TV stations and the Fox Broadcasting Company, which posted its best quarterly profit in two and a half years, News Corp. CEO Rupert Murdoch said in a statement.
Later, during a call, the company reportedly revealed that it was exploring strategic options for MySpace. Several media reports suggest that the options included a possible sale of the social networking site, which ranks closely behind Facebook.
Beating rival bidders like Viacom, News Corp grabbed MySpace in 2005 for $580 million. In 2006, the acquisition yielded a three-year $900 million search advertising deal with Google for the company. That was the beginning and the end of MySpace revenue journey as people began to migrate to newer sites. MySpace began sliding down the slippery slope due to instense competition from Facebook and Twitter. While MySpace had 60 million visitors in October (ComScore), at a time when Facebook enjoyed 151 million visitors monthly.
Over the past year, News Corp. has worked on remodeling MySpace from inside out. Efforts included restructuring, partly due to which the company's digital-media business took a $275 million pre-tax charge, staff shuffling, redesign, repositioning MySpace as a media company instead of a social network, and reformulating advertising deal with the search engine giant Google.
Recently, MySpace axed almost half of its employees. With our recent relaunch as an entertainment destination for Gen Y, we introduced a much tighter focus, a significantly streamlined product and an updated technology platform, CEO Mike Jones said in a statement on the layoffs that affected 500 employees across all global divisions.
The pink slips were served after the company announced in October 2010 that MySpace would become more of an entertainment hub, instead of being a social networking site. Despite the revamp, there were reports that the site still suffered from declining traffic and revenue.
The hearsay on MySpace sale have been doing the rounds for quite some time now. Even back in November 2010, Chief Operating Officer Chase Carey had revealed that News Corp is open to a sale of beleaguered MySpace.
We have really overhauled the product and made it a very different experience and I think they did a very good job, Carey had said.
Back then partnership was also considered as one of the options, but now sale of the restructured, remodeled and revamped MySpace seems to be imminent.