News Corp. Puts Myspace on Double Secret Probation
That big Myspace relaunch we read about last week? That’s all fine and good.
But the troubled Web property is a…really troubled Web property, its News Corp. parent stressed today. And it needs to get its act together before it gets kicked off campus.
That’s the message that COO Chase Carey took pains to get across during his company’s earnings call this afternoon.
Revenue at Myspace was down $70 million compared to the same quarter a year ago, the company said, and “traffic numbers are still not going in the right direction, Carey said. Which means that its “current losses are not acceptable or sustainable.”
Okay. But Myspace has been in decline for some time, and Jon Miller and Mike Jones have been trying to fix it for more than a year. And last year at this time, we heard a similar assessment, only then Carey kept calling the site a “work in progress.” So how much more time do they have?
Carey: “We judge in quarters, not in years.”
My understanding is that when Miller took the job as News Corp.’s chief digital officer in the spring of 2009, he believed he had a real shot at fixing the social network, which had already cooled from red-hot to not at all.
But sources in and out of News Corp. tell me that Miller and his team are now merely hoping to patch the service long enough to find a buyer. Perhaps no one has told Carey, who seems to be conducting an anti-sales pitch.
First look at Rupert Murdoch’s latest report card: News Corp. ended the September quarter with revenue of $7.4 billion and earnings of $0.27 a share (after factoring out a one-time tax gain). That’s almost exactly what the Street was looking for–expectations were $7.4 billion and $0.24 per share.
A quick run-through by unit:
- Cable: Up, because ad dollars are up and so are those affiliate fees that cable providers don’t want to pay but do.
- Movies: Down, because last year the company had an “Ice Age” movie in its results, and this year it’s fairly hit-less. It is making money selling reruns of “How I Met Your Mother,” though.
- Broadcast TV: Up, because local TV stations are doing better than last year, when they were still crippled by the recession.
- Satellite: Down, because costs were up.
- Publishing: Up, because newspapers are doing better than last year, when they were terrible. Ad revenue is up 13 percent worldwide. (This is where I note that News Corp. owns Dow Jones, which owns this site.)
- Random other stuff: Down, in large part because of Myspace and the rest of News Corp.’s digital unit, which is still trying to turn around.
I’ll come back to liveblog the conference call at 4:30 eastern, in the hopes that Murdoch says something interesting about politics, pay walls, the economy, Myspace, Apple and/or Google. He usually does!
BIG bummer: No Rupert on call today–because he’s traveling. (Some place with no phones? What’s up with that?)
CFO Dave DeVoe running through segment performance.
Cable: Some boasting about Fox News, FX, Big 10 Network, etc.
Movies: Nothing new here.
TV: TV stations up, but broadcast network losses up big “from higher cancellation costs.”
Satellite: [Apologies, had to duck out for a second.]
Newspapers: Again, ads up in all big newspapers.
Other/Digital: $70 million lower search and ad revenue at Myspace y/y.
Guidance: Leaving unchanged (though DeVoe notes that Myspace is still under plan).
COO Chase Carey:
Lots of focus on our retrans deals, and they are “critical” to our future. “We will be taking this business to a whole new level of profitability.”
Lots of growth ahead in International pay TV market.
Walk through of “key initiatives” throughout the company.
[Still sulking over Rupert-less call.]
Fox Film hasn’t had breakout hits, but no stinkers “in an industry known for them.”
We’ve got Jim Cameron locked up for Avatar 2 and 3, you know. And Modern Family is going to make us a pile of money in syndication.
Wish the World Series wasn’t such a bummer, and a short one. But NFL on Fox doing great.
WSJ still growing. Building digital business that “will take time to emerge.” “We feel very good” about subscription business in U.K.
“We’ve been clear that Myspace has been a problem.”
But relaunching “and we feel really good about” it. “Current losses are not acceptable or sustainable” and current management knows it, even though it’s not their fault.
But we know that we have to work very hard in coming months to get this thing sustainable.
[This is some of the most negative commentary I've heard yet from News Corp. on Myspace. Hard to sell an asset when you're describing it this way.]
Myspace: How much time do you give the relaunch to figure out if it’s successful. And what if it’s not?
Carey: We judge in quarters, not in years. Goal is to get to a place where top-line revenue is going in the right direction and “a clear path to profitability.”
We feel good about the relaunch. But “our traffic numbers are still not going in the right direction” and we have to stabilize that.
Fox TV content on digital platforms: It’s available on Hulu and Fox.com. How is that strategy going, and will you continue to be open?
Carey: Broadly: “This digital arena is still evolving.” We’re very focused on managing rights. Key issues: Windows, ad load, pricing. [Not answering at all, really.] “We think the digital arena is a very important one” particularly mobile, iPad, but “look, scarcity of our product is a real value.” But we’re learning as we go. “I do think it’s important that the digital platforms continue to develop dual revenue stream options.” That’s critical, and options are just beginning to evolve.
More on Myspace: There are a lot of operations in “other” besides Myspace: Mobile, Fox Audience Network, etc. What else could improve there?
Carey: Only two other businesses in there: Mobile, and outdoor networks, (and IGN). Not a lot of room for growth in those businesses.
So it’s really about Myspace?
Avatar: What’s upside here?
Carey: Sequel to the most successful film ever? It should be pretty good! “Enormous events, without comparison or rival.”
[Please bring Rupert back!]
Please talk about terms of new Cameron deal?
On retrans: Cablevision said they got better terms by holding out for a couple weeks. How do you react to that? If true, will we see more of these holdouts?
[Also a question about BSkyB I'm not that interested in.]
Carey: Mostly I saw Cablevision complaining that the government didn’t bail them out. But we feel pretty good about where we are. We didn’t think the government needed to get into it, and it would have been nice if the government would have been clear up front “it may not have gone off the air at all,” but whatever–”this was a matter to be dealt with between private parties.” [Ignore all those press releases we sent out!]
Can you talk about advertising trends and expectations?
DeVoe [I think]: They haven’t changed.
Cable margins: How long can you keep growing them?
Carey: We have room to drive a number of our channels, via more distribution, jacking up fees, advertising, etc.
What about getting more money from regional sports networks?
Carey: Won’t get into specifics.
[We want Rupe! We want Rupe!]
International channels seem to be doing well. Where is that growth coming from?
Carey: Part of it is the weak U.S. dollar. But overall, growth is “big and broad.”
Oh man. Even Chase Carey is yawning as he answers the question.
[Skipping accounting question.]
Back to network TV: Please talk about sports programming costs, etc. NFL, baseball, NASCAR. You spend a lot. Does retrans help support those costs? Or will you move some of that to cable?
Carey: I don’t think it makes sense to differentiate broadcast and cable much anymore. That’s the point of retrans–to make broadcast look like cable, with dual revenue stream.
On sports: It’s expensive, and draws big crowds. “It’s a unique strength in a world of DVRS” but “they come with big price tags.” We’d like to continue running it, but we have to do it at the right price.
Retrans does help, though–networks that are only ad-supported won’t be able to pay for these rights over time. Still, gotta be disciplined, etc.
Back to digital: What’s going on with Google TV? Are you thinking about different devices and different screens as a way to window, instead of calendar? I.e.: Make it available on PC but not on the big screen, etc.
Carey: I think within the house, the difference between screens won’t matter. I do think mobile is a discrete platform. [And some general chatter about tablets.]
But generally, “our content is incredibly valuable” and “we’re not going to throw it out there for everybody” unless we get compensated for it.
[Boring question about syndicated TV. Carey flipping through papers]
Hey, what about M&A deals, like Yahoo?
“Things like Yahoo are because the press needs things to write about.” [Zing! Also, hey, Jon Miller!] “We don’t need to make any acquisitions. But if there’s something out there, we should consider it, but we’ll do it in a very disciplined way” like we have in the past. Generally, we’d rather build than buy. “But if we see something we can acquire at a very attractive price that fits, we’ll take a look at it.” We’re not shopping.
[Skipping another cable channel question.]
Time for press Q&A:
How do you make broadcast look more like cable?
Carey: Retrans fees, like we’ve been talking about for the past couple years.
What about doing “premium video” (windowing movie release on TV?).
Carey: Looking at it.
What about further delaying movies to Netflix, Redbox beyond 28-day window (Warner talked about this today)?
Carey: We’re okay right now, but we’re looking at it. But as VOD grows, windows will change and evolve. But right now “we feel what windowing we’ve done has been good for us.”
Color on Apple TV 99-cent rental, please:
Carey: It’s pretty new. Only relevant for the past month or so. Too early to judge.
What’s your vision for European and British markets after you buy Sky? Will you buy Endemol?
Carey: Don’t really want to talk about it, too early.
Please talk about Times of London pay wall performance to date. Also, what are you thinking about your iPad newspaper in the U.S.?
Carey: Re U.K.: “We feel very good about it. Realistically, it’s very early….This is not something that’s a one or two quarter game.”
Same thing with the “whole digital arena” evolving, etc.
Hah. Refuses to talk about iPad newspaper. Which is not a newspaper!
Call finished, mercifully.