MySpace Restructure And Digital Write-Offs Cost News Corp $275 Million

Jon Miller, CEO, Digital Media, News Corp

The cost to News Corp (NSDQ: NWS) of getting MySpace in to shape? A big chunk of $275 million in the last three months of 2010 alone. That was the Q2 total for devaluing its Digital Media Group and for the MySpace restructure and layoffs, recorded as a pre-tax accounting charge.

The group’s performance was the primary reason losses from News Corp’s “other” revenue segment jumped by $31 million to $156 million this quarter – “stemming largely from lower search and advertising revenues at MySpace“. On the analysts call, the company said “results at MySpace have been below our expectations“.

Results from two other parts of the segment – the outdoor business and from Fox Mobile (before it was sold in December) – had improved. So MySpace is in the frame as the drag in the pile, which also contains IGN and is led by chief digital officer Jon Miller.

  • News Corp’s Q2 group operating income grew from $712 million to $1.29 billion, with growth returning from its cable network programming and television segments in particular, while publishing swung from last year’s loss to a healthy operating income. 
     
  • However, the publishing result was flattered by the bounce from the previous period’s $500 million litigation settlement – under the hood, The Daily setup costs were amongst the reasons publishing was broadly flat over the year.

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