News Corp. Faces the Myspace Music With a Big Writedown [Updated]
Here’s the flip side to News Corp.’s digital optimism: The company has taken a $275 million charge on Myspace and its related Web businesses, it disclosed in today’s quarterly earnings report.
Here’s the formal language: “The Company recorded a $275 million pre-tax charge for the impairment of goodwill related to the Digital Media Group and an organizational restructuring at MySpace.”
Translation: Firing people en masse, as we did at Myspace last quarter, is expensive. Also, we’re writing down a lot of the social networking company’s remaining value.
I’ve asked News Corp. (which also owns this Web site) for more clarity on the charge: How much of it stems from layoffs? How much of it comes from a writedown on Myspace’s value? And were any other assets involved? At this point the company’s Digital Media Group is pretty much just Myspace, but it does have other stuff there, most notably its IGN site.
It’s worth noting that during today’s unveiling of the Daily, the company’s iPad newspaper, CEO Rupert Murdoch said that the company had already written down the first $30 million it had invested in the project. So it’s entirely possible that that figure is part of the $275 million.
More if I get it. And I”ll be back at 4:30 pm ET to cover News Corp.’s earnings call live.
UPDATE: For the record, News Corp.’s $275 million charge on its digital operations, announced today, breaks down this way: $107 million of that is for restructuring, and the remaining $168 million is a writedown, presumably focused on Myspace.
And for those who care–costs for the Daily are being assigned to News Corp.’s publishing group: $7 million of the $30 million it has spent so far were assigned to this quarter.