Investors are starting to take an increasing bullish look at Fox Interactive Media (FIM) and News Corp.'s long-term economic outlook as MySpace starts to make a difference on their bottom line.
In a recent report released by Merrill Lynch (MER), the company said that they expect News Corp. (NWS-A) to enjoy double-digit growth over the next few years, with the majority of that being driven by ad revenue generated by MySpace.
The report also said that Fox Interactive Media, which includes MySpace, hasn't been a part of the company's valuations for News Corp. until a short time ago. The report stated that, “we are now increasingly confident that News Corp. will be successful in monetizing its online presence.”
According to News Corp. CEO Rupert Murdoch, MySpace is garnering almost $25 million a month in advertising at MySpace, and across all of the FIM properties it is close to $1 billion in overall revenue. Merril Lynch says that the company will reach the billion mark sometime next year. Most of that coming from international expansion, ad revenue and the Google (GOOG) partnership.
Merril made another point that could point to even stronger growth if News Corp. can figure it out, and that is that there is a ton of potential in FIM that hasn't even been close to being tapped.
Some of the problems are that MySpace has been slow in growing its internal sales force, and a lot of advertisers are still figuring out how to safely interact their brands with user-generated content. Not that long ago MySpace was only selling 50 percent of its inventory, and 80 percent of that was via third party networks.
A lot of this potential will be released when their ability to target is improved. For example, even though they generate more page views than any other Web site, they pull only small fractions of the ad revenue. They only garner 10 percent of what Yahoo (YHOO) pulls in.
Once the safety for brands is solved, these numbers should increase for MySpace exponentially. They better not take too long though as a number of big competitors are making other deals that will tap this lucrative market as well.
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Tracked on: March 8, 2007 4:01 PM | Permalink to Trackback