News Corp Says It Lost $254 Million On MySpace
News Corp lost $254 million on MySpace, the company said as it reported revenue that beat analysts' expectations. — The loss pushed News Corp.'s Q4 net income down 22 percent to $683 million. — News Corp said MySpace's losses during …
Context & Ripple Effects
Four years ago News Corp was touting Fox Interactive's first annual profit and guiding MySpace revenue past $800 million for fiscal 2008; by late 2008 analysts were already charting the projected slump in its ad sales alongside Facebook's rise. The October 2010 reboot aimed at recapturing a young audience was the last visible attempt to reverse the slide before this disclosure.
The $254 million write-down now puts a hard number on that trajectory: even in a quarter where News Corp's total revenue beat analyst expectations, MySpace dragged net income down 22 percent to $683 million, making the unit the clearest single drag on an otherwise healthy print.
First-order effects
- News Corp's Q4 net income fell 22 percent to $683 million, with the MySpace loss accounting for the shortfall against an otherwise better-than-expected revenue quarter.
- The disclosure formalizes MySpace as an impaired asset on News Corp's books, sharpening pressure on management to fix or exit the property rather than keep funding it.
Second-order effects
- Every quarter MySpace stays on the earnings statement, it hands competitors and advertisers a public yardstick of News Corp's social-media failure — reinforcing the ad-market flight to Facebook documented since 2008.
- A writedown of this size typically precedes restructuring: layoffs, office consolidation along the lines of the empty-office cuts reported in 2009, or an outright sale become the realistic options left.
Third-order effects
- If the pattern holds, it marks the end of the era when legacy media conglomerates could buy leading consumer web properties at scale and expect them to compound value — future deals will be judged against the MySpace write-down as the cautionary case.
- It also accelerates the structural consolidation of social advertising around a single dominant platform, since advertisers' retreat from a failing second network concentrates budgets rather than diversifying them.
The trend: Social networks are consolidating into a winner-take-most ad market, and diversified media owners are being forced to write down or shed the also-ran properties they bought during the first web boom.