Digital guru has lots to do

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Reigniting growth at MySpace, figuring out the future of its search deal with Google and perhaps helping to strike an agreement between Hulu and Disney are high on the priority list for News Corp.'s new digital ace, Jon Miller.

As expected, the conglomerate said Wednesday that it has signed the former AOL CEO and digital right-hand man of Barry Diller to the newly created positions of chairman and CEO of the Digital Media Group and chief digital officer.

Based in New York and reporting to News Corp. chairman and CEO Rupert Murdoch, Miller will be charged with taking the company's digital efforts to the next level.

Or, as Murdoch put it: "Our focus moving forward is twofold: to enable our digital businesses to flourish as individual entities and to bolster the digital strategies of our core media properties by treating them as central to, and not separate from, the enterprise."

Industry watchers say MySpace must be a top priority for Miller.

The social networking site has lost the buzz and user growth battle with Facebook and Twitter of late, and even its financials have been mixed in recent quarters as online advertising revenue growth has been hit and the site has seen higher costs to expand around the world and add features.

Fox Interactive Media, the unit that houses MySpace, reported revenue of $856 million for the latest fiscal year ended June 30. However, it posted its first-ever revenue decline — 3% — in the most recent second quarter that ended in December driven by a lack of search and ad revenue growth and lower subscription momentum at video game and entertainment enthusiast site IGN.

"(Jon's) immediate focus must be on MySpace and stabilizing its base and then creating a strategic vision to help it reverse its current trends and once again become a digital leader," said Ross Levinsohn, one of Miller's partners at digital media investment firm Velocity Interactive Group and a former head of FIM.

Miller also faces the expiration of the Google-MySpace ad search deal and related guaranteed payments in mid-2010.

Pali Research analyst Richard Greenfield said Google does not seem to care about social search and has done a less-than-stellar job refining its algorithm for MySpace.

"It is harder to conceive Google paying anywhere near their prior commitments to MySpace" once the current deal runs out, he concluded. "While Yahoo, AOL and MSN could all be bidders for a new MySpace deal beginning in July 2010, we suspect all have learned from Google's overpayment. In turn, we are estimating a 50% drop in search fees." (partialdiff)
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