News Corp. puts Myspace on the block
News Corp. said Wednesday it was exploring a sale or other "strategic options" for Myspace, the ailing social network which has been eclipsed by Facebook.
"We recognize that the plan to allow Myspace to reach its full potential may be best developed under a new ownership structure and we're evaluating those strategic alternatives," News Corp. chief operating officer Chase Carey said.
"With a new content focus and structure in place we believe now is the right time for News Corp. to consider strategic options," Carey said in a conference call with financial analysts to discuss News Corp's second quarter earnings.
"It could be a sale. It could be a new investor coming into it. It could be us staying in with a restructuring," said Carey, who put Myspace on notice in November saying the losses at the social network were "unsustainable."
Carey said there was an "early window" on a decision for what to do with Myspace, purchased for $580 million in 2005. "It's something you'll see in the first half of the year," he said.
Facebook has grown to more than 500 million members while Myspace's numbers have dwindled. Earlier this month, Myspace announced it was cutting some 500 jobs, nearly half its staff.
News Corp. said net profit rose over 150 percent to $642 million in the second quarter of its fiscal year on a strong performance by its television holdings.
Revenue was up slightly, rising to $8.76 billion from $8.68 billion in the same period a year ago. Earnings per share of 29 cents were better than the 28 cents per share forecast by Wall Street analysts.
"News Corporation's second quarter results demonstrate the mounting vigor of our global channels business," News Corp. chairman and chief executive Rupert Murdoch said in a statement.
"In the US market, our cable channels are still expanding and adding subscribers, while increasing their revenues and profits at a double-digit pace," he said.
Murdoch, who earlier Wednesday unveiled a digital newspaper for Apple's iPad called The Daily, said he was "pleased with the continued recovery of our US broadcasting business."
Operating income from News Corp.'s cable television networks rose 22 percent in the quarter to $735 million and its other television properties reported a five-fold jump in operating income to $151 million.
News Corp., which owns the 20th Century Fox studio, said operating income from its movie business fell to $189 million in the quarter from $324 million a year ago, when it released "Ice Age: Dawn of the Dinosaurs."
"Black Swan" and "The Chronicles of Narnia: The Voyage of the Dawn Treader" failed to make up for the disappointing box office for "Gulliver's Travels."
News Corp. said advertising revenue was higher in its three main newspaper markets -- Australia, Britain and the United States.
Operating income for the publishing segment rose to $380 million after a loss of $90 million in the same quarter a year ago.
News Corp. said the restructuring at Myspace contributed to a $275 million dollar writedown in the quarter at its Digital Media Group, which includes the social network.
Without providing figures, News Corp. chief financial officer Dave DeVoe said results at Myspace have been "below our expectations."
News Corp. does not break out results for Myspace in its earnings but the "other" segment which includes the social network reported a second quarter operating loss of $156 million, $31 million wider than a year ago.
Carey said News Corp. had received "a lot of interest" in Myspace.
"The interest to date has ranged from 'A' to 'Z,' from industry players, financial players to foreign to domestic," he said.
News Corp. shares were up 0.97 percent at $16.15 in after-hours trading.
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