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FIM-Google: More Details; Already Talking About Other Possibilities

Considerable conversation during the News Corp. earnings call about Monday’s announcement of the $900 million-minimum search deal with Google. News Corp. COO Peter Chernin said they’ve been exchanging e-mail today “on other things and we’re going to have some meetings with them.” (What could they be talking about? Just to list a few possibilities, remember, the deal, while large in traffic and dollars, doesn’t cover all of the News Corp. digital properties and doesn’t include video or mobile.)
Chernin sought to place the deal in context within News Corp. by calling it a “landmark deal” for the corporation. “Yesterday, we took the next big step in monetizing the staggering audience we deliver by agreeing to this $900 million deal, which I believe is one of, if not the largest, non-equity advertising deals in the history of internet.”
Payout: Chernin: “The Google deal is heavily back-end loaded. We’ve got a lot of work to do in fiscal ’07 in terms of getting them integrated, getting all the data to them, getting the toolbar loaded and I just want to make sure that from a guidance point of view people recognize that a pretty de minimis amount of that guarantee takes place in fiscal ’07; less than 10 percent of the guarantee.”
Profit: Chernin: “The $900 million, as we said earlier, is a mininum guarantee. We would hope and expect … that we’re actually going to deliver a greater amount of profitability since the bulk of the revenue from any ads sold come to us.