Murdoch: Who's Laughing Now?

At Goldman Sachs Communacopia: Analysts Also Hear From Diller, Dauman

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NEW YORK ( -- News Corp. Chairman-CEO Rupert Murdoch was in particularly lively mood this morning at the Goldman Sachs' Communacopia conference in New York. What with the ink still drying on his recent acquisition of Dow Jones and The Wall Street Journal and the launch next month's of Fox Business Network, Mr. Murdoch's reputation of late has been that of a media mogul determined to buy his way to the top.
Rupert Murdoch
Photo: Nancy Kaszerman

Rupert Murdoch

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The ever-candid Aussie was discussing the box-office success of 20th Century Fox's global hit "The Simpsons" when he decided to address his recent notoriety head on.

"People think, 'Oh Murdoch's just going to buy something.' I'm happy to put my record of investments up against any of my peers," he told Goldman Sachs analyst Anthony Noto.

He pointed to the surprise success of Fox News in spite of competition from CNN, and moved to Fox Interactive's MySpace, perhaps the most controversial of his assets.

"Two years ago you were all laughing at me," he said, before addressing its profitability. Since News Corp. acquired MySpace, he said, "it's certainly worth 20 times what we paid for it."

WSJ, meet Fox Business Network
On the topic of how his two latest projects, the Journal and Fox Business Network, could potentially be integrated, Mr. Murdoch said, "There's no reason we can't have Wall Street Journal coverage, whether it's political, travel, et cetera. If it is business news, there will be regular appearances by Wall Street Journal reporters. [CNBC] has that relationship and we'll have that for the next four years."

His online monetization plans for the newspaper, however, have yet to be determined. When Mr. Noto asked if Mr. Murdoch intended to keep the subscription model for, he replied, "I haven't made up my mind yet. It's something that's right on the front burner."

Would Mr. Murdoch lose the reported $50 million in revenue by making the switch? "I don't think so. There's a lot [of advertising] sold in duplication of the paper. If the site is good, I think you get much more than that back in textual search. The daily hits would be the most affluent, influential people in the world. You'd be able to target them and get high CPMs with high revenue growth."

Rival New York Times last night revealed it was dropping its online subscription model in favor of making all its content free and ad-supported.

Myspace: 'More monetizable'
Mr. Noto touched on the other key digital asset in News Corp's portfolio, MySpace, and the key points of differentiation for advertisers between the social networking hub and its closest competitor, Facebook. Mr. Murdoch said the two sites have more than 50% of an overlap in special features, but the ability to hypertarget its user base was unrivaled in his eye.

"Whatever an advertiser wants we can give them -- if you want to target by country, by region. The more specific it is, the higher the CPM you will pay. ... We think [MySpace] is a great deal more monetizable than anybody else's [platform]. It's limitless the amount to which we can hypertarget."

The other crucial factor Mr. Murdoch thinks MySpace has an advantage on Facebook is the increased protection of its users. "We've taken huge safety measures against sexual predators, and Facebook has done none of that yet," he said. Mr. Noto began to transition into a discussion of News Corp.'s cable properties before Mr. Murdoch interrupted him. "If you wanted to stalk a young girl on Facebook, it would be very easy," he said rather abruptly. Mr. Noto paused with a nervous laugh before adding, "I'm gonna trust you know that."

Another major player in the online advertising space, IAC's Barry Diller, was also at the conference, and spoke before Mr. Murdoch about his plans to make a close competitor, with Yahoo and Microsoft, for a slot as one of the top three ad networks. "The truth is from Google to the next player, there is a wide variance in how much efficiency you get per search," he said. "There's no chance another player can enter that space, but there is a chance you can have three ad networks."

Diller sees a chance
He said Yahoo had the advantage with its recent work with Panama, which gives Ask the opportunity to capitalize on Microsoft's constant experimentation and losses in the acquisition race.

Ultimately, the search provider that can use its audience and demographic information to the best of its advertisers' advantage will come out on top in the next couple years. "Having an audience you know something about and doing a service to something they're interested in is going to enjoy years of quick results," he said.

Viacom CEO Philippe Dauman also spoke to analysts. Mr. Daumann continued to beat the drum for future innovative ad models. "I'm all about monetizing our assets as much as possible. Even taking advantage of opportunities people might not even think of," he said.

The latest example he pointed to was Harmonix, one of his first major acquisitions since coming to the CEO post last fall that he believes represents a major opportunity. Late fourth quarter will see the launch of "Rock Band," the company's expanded take on the "Guitar Hero" concept of playing multiple instruments in a virtual, interactive setting.

"We're using it as another way to reinvigorate the music business. We have some deals with labels and great online applications, and we're developing capabilities in virtual worlds. For us, it's a way to get into those areas organically," Mr. Dauman said.

Viacom's cable priorities
Cable, which comprises the bulk of Viacom's business, remains a top priority for Mr. Dauman, particularly in the increased interest in the MTV brand after last week's headline-grabbing Video Music Awards show with Britney Spears. "We're taking chances to reinvent the brand, make investments for the future. The VMAs were a symbolic event for the whole week and beyond, and the video streams were multiple of what they were last year."

Last week was also a particularly lucrative one for all Viacom cable priorities. VH1's "Rock of Love" was the second most-watched program among young adults the same night as the VMAs, while Nickelodeon's new sitcom "iCarly" garnered huge ratings over the course of its premiere weekend.

"When all of that plays together, we try to develop with a 360-degree approach," he said.
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