Facebook may be growing faster than MySpace and the threat of a recession looms. But Peter Chernin, News Corp.’s (NYSE: NWS) president and COO is not worried. He outlined the reasons for his optimism for attendees at Citgroup’s 18th Annual Global Entertainment, Media & Telecommunications Conference, in Phoenix:
— All about open apps: While Facebook is growing faster, Fox Interactive’s MySpace still dominates. The reason for all the attention Facebook’s been getting, according to Chernin, was due mainly to its six month head-start in launching open applications. Since MySpace and Google (NSDQ: GOOG) countered with OpenSocial, Chernin said the advantage has been taken away from Facebook. The first big test comes later this month, when several new Open Social apps will be released. Shortly after, the gap in growth between the two social nets will narrow, Chernin insisted.
— Advertising and social nets: Portals used to be users main home page, which made it prime real estate for advertisers. But as users have turned to social nets, portals are waning as destinations, at least in comparison, Chernin said. However, advertisers haven’t caught up to that fact, at least in terms of where they’re allocating their ad dollars. “That’s why MySpace still represents a major ad growth opportunity.” Other plans for MySpace in the near term include relaunching its music channel, building up MySpaceTV and creating more affinity groups along the lines of cars or romantic comedy film fans as another way to create more ad opportunities. The Self-Serve advertising function aimed at small businesses –
so far 3 million businesses are participating Chernin claimed that out of 23 million small businesses, only one million advertise online, presenting the social net with a fairly wide target. MySpace’s Self-Serve initiative, which gives small businesses tools to tailor and target display ads, will also be ramped up at the end of January.
— Not vulnerable to recession fears: Some investors were a little spooked during News Corp.’s Q3 conference call. Some wondered whether the company had any plans to buy back shares. Acknowledging the threat of recession, Chernin said he was seeing growth across the board, even on broadcast, particularly with respect to the current scatter market. “We see no signs of any slowdown in our business. Even if there’s an economic downturn, we believe we are structurally well-protected.”
— Dow Jones: Chernin was asked to justify DJ’s purchase price. “Let’s put the price in perspective, I’m not sneezing at $5 billion, but it represents less than 10 percent of the company’s market cap. We look at this as the most valuable brand, not just a newspaper.” Over the next three to five years, ability to expand and migrate that brand to digital. “It’s an area of limitless possibility.” Secondly, Chernin said that the great social transformation happening in emerging markets will produce a new class of millions of new readers. At the start of his remarks, Chernin said: “We are focused on buying and developing networks and platforms in the developing world, in Asia, Eastern Europe and South America. We believe that both those areas – digital and the emerging world – are likely grow significantly higher than assets in the U.S. and Europe in years to come.”