News Corp. faces Web integration challenge

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Rupert Murdoch's News Corp. invested roughly $1.5 billion this summer in Web properties, but just how News Corp. will integrate its traditional publishing and broadcasting models to incorporate newly acquired Internet properties is still a mystery, apparently even to Mr. Murdoch.

Speaking at the annual Goldman Sachs Communacopia conference in New York last week, He indicated it was still unclear whether News Corp. would use a single brand globally online or keep his recent Web acquisitions under their separate names.

Mr. Murdoch, however, is not just testing the waters, he's diving in. In April, he declared his media conglomerate was on the verge of making the Internet its focus. In July, News Corp. formed Fox Interactive Media (FIM), hiring Ross Levinsohn, formerly general manager of Fox Sports Interactive Media, as president of the division. For a company that operates as vertically as News Corp., finding a way to integrate the online properties with more tradiaional media like TV and newspapers will be a huge challenge.

But Mr. Levinsohn, known for having a strong grasp of Web fundamentals, could prove to be Mr. Murdoch's online Roger Ailes, the trusted deputy over his TV properties who has taken Fox News Channel from a start up to a consistent ratings winner.

A decade ago, Mr. Murdoch was a pioneer in Internet publishing, investing heavily in a global joint Internet venture, iGuide, which would marry communications, entertainment and advertising, with partner MCI. The goal was to take on fledgling online services America Online and Prodigy.

But by 1996, the venture was shut down, a victim of an ambitious plan that was well ahead of where consumers were in their home-based Web use. The 2005 buy up is presumably being driven by a different set of assumptions, as online has grown up considerably since 1995.

Mr. Levinsohn, who came from Alta Vista to join Fox, oversaw the online, wireless and broadband presence for Fox Sports, Fox Sports Net and Fox Sports World and Fuel as well as supervised interaction between all broadcast and cable networks within the Fox Sports Group. Under his leadership, grew from less than 800,000 unique users a month to averaging more than 10 million per month. In his new role, he's overseen the acquisition of Intermix Media, Scout Media and IGN Entertainment in quick succession.

Growing fast

"Media companies in general are looking for a share of the fastest-growing market, which happens to be the Internet right now," said Seth Alpert, managing director of investment-banking company AdMedia Partners. Indeed, while total media spending will rise a modest 5% in 2005, Internet spending will catapult 34%, according to online marketing research firm eMarketer.

Mr. Murdoch's Web properties together added up to the fourth-highest-trafficked areas on the Internet.

But a large audience isn't enough. "You don't just want exposure," said Rishad Tobaccowala, chief innovation officer, Publicis Groupe's SMG Next. "MySpace and IGN have built themselves through community and engagement-both are very interactive. News Corp. needs to build on that and do something interesting, because it's about more than just eyeballs."

Playing on that strength is a sound idea, Mr. Tobaccowala said. IGN, with 10 million unique views, and MySpace, with its 8.4 million unique views, have drawn large audiences. And two-year-old MySpace has done well with its social-networking mission by providing services that are among the most popular consumer-centric activities online-blogging, posting photos and music sharing and opinion making.

As important, the acquisitions also give News Corp. access to younger people. "From a demographic standpoint, we lacked the ability to reach the 15-to-30-year old," Mr. Levinsohn said. "Fox as a company does well at reaching the 30-plus, but we were lacking the youth brand."

He plans to sell ads not only across the new acquisitions, but across online and offline channels as the company now sets up between TV and wireless channels with marketers such as Cingular, UPS and FedEx.

"If we're successful, we could do a lot of integrated selling-that could represent 20% to 40% of our online revenue," Mr. Levinsohn said.


Recent acquisitions

* Intermix Media, with MySpace for $580 million in July;

* Scout Media, a college sports network, for about $60 million in August

* IGN Entertainment, a gaming company, for $650 million in September.

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