Listening to the News Corp. earnings call now and, as expected, some more details on Fox Interactive Media during the prepared remarks and now during the Q&A. Asked directly about the questions swirling around the Google-FIM deal, COO Peter Chernin said, “We do have a binding letter of agreement and we are significantly over delivering on our guarantees.” But Chernin said the companies are still working on the complicated “long form” and that several areas are under discussion, including places where they are looking to “mutually benefit each other.”
-- FIM had $125 million in revenue during the last quarter, attributed primarily to MySpace.com. MySpace had about 20-25 percent growth over the previous quarter. Chernin reminded analysts that News Corp. already had said it expects FIM to over deliver on the projected $500 million revenue for 2007. Revenues for MySpace tripled over the year and were up 70 percent for FIM overall. Chernin: “If anything ... we have seen our monetization growth momentum increase over this year over the last year, as we are starting to see some of the improvements we have made in advertising technology and advertising sales force begin to take effect.”
-- FIM had its first profitable month in December. Chernin expects the unit to be “marginally profitable/breakeven” in 2007 and for profitability to increase “dramatically” in FY08. A funny exchange followed: Chernin: “I think our hopes are that we can get this thing up to a margin in the low 20 percent range in FY08.” Murdoch: “I think that’s pretty pessimistic. I think we can do better than 20 percent.”
Digital downloads: News Corp. is one of the few companies that piggybacks a press call onto the analysts’ call. When I asked Chernin about the company’s syndication strategy, noting the experimental nature of late, Chernin said “experimental” was a good characterization: “We believe that this is a good time to experiment widely with the dissemination of our content. Anybody who respects our copyrights, we’re largely willing to try things. ...  I think right now what we are trying to do and certainly what I’ve instructed the people at FOX Digital Media to do is get our content out there, get it available to users. Let’s try and monetize it on a download basis or paid download basis. Try it on advertising-supported stream basis. Let’s try and get it aggressively on MySpace, let’s try and get it aggressively on our station websites. And so we are trying to do a lot of different things right now, and we will hopefully be smart enough to move aggressively in the areas of those who are successful and move away from the ones that aren’t successful.”
Spin-offs?: Murdoch: “No. We are very happy with our mix of assets.”
Tribune: Murdoch: “We are interested quite openly and frankly, if we could do something, not too expensive but which would lead to a joint operating agreement between the New York Post and Newsday. We think that will be a very, very powerful combination for advertisers ... “ Chernin said it would be a small net investment; Murdoch said it would be under the Chandler’s 51 percent.
China: Not sure if this was Murdoch trying to manage expectations but he was emphatic about the difficulties News Corp. faces in China, especially with MySpace. “We don’t do very well in China. ... All I would say there is that nobody—and I challenge anyone to argue this—nobody, none of the American media companies or British media companies have made any impact there yet. ... It is a vast market, but it is certainly a very, very sensitive one and as we have seen what happened to Google there and what happened to eBay there, it is very difficult, even to—to Yahoo, it is a very difficult market for outsiders.”
Digital plans: Murdoch: “Obviously MySpace is the big star at the moment. And we have to grow ... I see tremendous growth in that and its being a very big profit driver for the overall company in the coming years—if we get it right. And keep it right.” Across the company, “all our newspapers, all of our television stations are very busy developing and expanding their sites and their revenues are growing very well. Some are profitable. Nothing of significant amounts, some like $5 million, some like $10 million; those profits are credited to those operations. But we have put in a lot of effort right across all our activities to extend ourselves across the internet. ... We will keep our eyes open for other opportunities ... we see a lot of small things, which can help us technologically, maybe standalone, but no major investments at this stage.”
E-commerce/mobile: Chernin: “E-commerce is a potential; probably wireless is a great potential growth area for us ... so that is one of the areas that the MySpace team has been spending a lot of time.” (MySpace and Vodaphone announced today the exclusive deal that Chernin mentioned to Forbes recently.) ... One of the things that we haven’t talked about at all is, we are seeing tremendous growth from Cingular in our wireless MySpace application.”
Lots more to this call including a lot of not-very-new chatter about YouTube and News Corp.’s stance on copyright, including its effort to set up filtrring at MySpace. You can read the transcript at SeekingAlpha.com