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News Corp. considers spinning off Myspace

Chase Carey, News Corp. president, tells analysts the company will pursue all options for the struggling social network. Myspace and other digital investments continue to drag on earnings.

February 03, 2011|By Dawn C. Chmielewski, Los Angeles Times

News Corp. raised the prospect of spinning off struggling Myspace, a signal that the media giant is getting ready to pull back from or exit social networks after being overtaken by Facebook.

President and Chief Operating Officer Chase Carey, in a conference call Wednesday with analysts, said the company was weighing strategic options for Myspace, which he said would be best able to achieve its full potential "through a new ownership structure."

A number of parties have expressed interest in acquiring Myspace, Carey said, adding that the company would pursue all options, including bringing in an investor or restructuring ownership led by the site's managers.

"The interest to date ranges from A to Z: industry players, financial players, foreign to domestic," Carey said. "It's incoming. We're not soliciting anything."

Myspace and other digital investments continue to drag on News Corp.'s results.

The company, controlled by Rupert Murdoch, recorded a $275-million impairment related to its Digital Media Group in its second fiscal quarter ended Dec. 31, reflecting the reduced value of assets.

The write-down includes restructuring costs at Myspace, where the entertainment giant recently laid off about half the staff in an attempt to achieve profitability, as well as losses from its sale of the Jamba mobile business.

News Corp. reported net income of $642 million for the quarter, a significant gain over a year earlier, when it reported net income of $254 million. Revenue rose to nearly $8.8 billion, up incrementally from $8.7 billion in the comparable quarter.

Television was the big driver in News Corp.'s results, with the cable networks, which include Fox News, bringing in nearly 60% of the company's operating income. The Fox television network and the locally owned station group saw a more than fourfold rise in operating income to $151 million, thanks to increased spending on political ads and a rebound in the local ad market.

The film group reported a decline in operating income to $189 million, from $324 million a year earlier, when Fox released the DVD of "Ice Age: Dawn of the Dinosaurs."

dawn.chmielewski@latimes.com

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