Murdoch has lots on his mind

Riffs on FIM, family and Gingrich for president

NEW YORK -- News Corp. chairman and CEO Rupert Murdoch expects revenue from the conglomerate's Fox Interactive Media unit to hit about $1 billion in the next fiscal year, which ends June 2008, and to account for more than 10% of the company's total revenue within five years, he said Thursday.

FIM includes MySpace, which he told attendees of McGraw-Hill's Media Summit New York will be one of the company's biggest growth drivers in the coming years.

Asked about his succession plans, Murdoch, 75, gave kudos to son James, who has been running U.K. satellite TV operator British Sky Broadcasting as CEO, but wouldn't commit to a clear answer.

"I just want to live forever," he joked. "I am enjoying myself too much."

Murdoch then said it will be up to News Corp.'s board to name a new CEO upon his death, but he pointed out that his six children would have a big say if they agreed on a successor as they will then hold the 38% stake that he now controls in the company.

Asked about James, who has repeatedly been rumored to be close to getting transferred to a post at News Corp. in the U.S., Murdoch said: "He is doing a great job at Sky."

He mentioned that when his son was appointed to the post, critics cried foul and nepotism. "Now, they all say we can't take him to the U.S. because they need him," Murdoch added. James Murdoch late last month denied the latest round of rumors that he would move to a U.S. post.

The senior Murdoch on Thursday emphasized that despite the recent focus on James, "there are other good members of the family" and said it was too early to say who would succeed him eventually.

In 2005, son Lachlan left a News Corp. post and moved back to Australia, even though he remains on the company's board.

Murdoch's comments came in an onstage interview at the Media Summit conducted by BusinessWeek editor-in-chief Steve Adler. It covered a broad array of topics, with Murdoch touching on everything from why he would love Newt Gingrich to run for president to international growth opportunities for News Corp.

Asked about DVD market trends, he said library product sales might have flattened, but "new films are doing better than ever" for News Corp.

Discussing digital media, Murdoch said MySpace has grown faster than his management team expected and has reached 150 million users, with advertising revenue growing about 30% every quarter.

He also said mobile phones are a big growth opportunity for MySpace and other assets. For example, under a deal with Cingular Wireless that launched six or seven weeks ago, MySpace already has signed up about 200,000 customers who now get mobile MySpace access. According to Murdoch, customers pay $3 a month, with News Corp. taking $2 to Cingular's $1.

While he admitted that managing the large increases in MySpace traffic has been a challenge, he shrugged off concerns about competition from sites like Facebook. Murdoch argued that many users end up having pages on several networking sites rather than abandoning MySpace for another.

Asked about MySpace's relationship with Internet search giant Google, with which it has an ad partnership, Murdoch admitted that when Google acquired YouTube, there was concern and overreaction on News Corp.'s side.

In the end, YouTube is "quite hypnotic" but not a real networking community like MySpace, he argued. "And it's hard, I think, to monetize," he added.

Asked about video gaming site IGN, which also is part of FIM, Murdoch shrugged off concerns that it has not developed as fast as MySpace. "We're pretty happy with it," he said, pointing out that unique visitor and other traffic growth has strengthened since the November launch of Sony's PlayStation 3.

Murdoch conceded that the newspaper business is rapidly changing.

"Newspapers are very vulnerable. We have got to be neutral about what platform we sell them on," he said. "The old lifestyle of families reading a newspaper over breakfast is gone."

However, he said he has no plans to sell News Corp.'s newspaper segment.

As biggest international growth opportunities, Murdoch mentioned India and Eastern Europe as well as Indonesia. In China, "we will behave ourselves until there is a change of policy, which will have to come," he added, referring to the difficult regulatory climate there.

Discussing the deal to swap control of DirecTV Group for Liberty Media's stake in News Corp., Murdoch said the satellite TV firm will have another "two to three good years" but increasingly be challenged by its lack of a broadband offer. "The appeal of the triple and ... quadruple play (that cable offers) will be very tough to compete with," he said.

Murdoch also argued that News Corp. has less need for a distribution play today as it has launched most big networks it needs and "our content is pretty well established."

Asked about the 2008 U.S. presidential race, Murdoch lauded Sen. Hillary Clinton, D-N.Y., for being "very intelligent" and "a lot stronger than her husband on defense" but "very calculating" and "a bit divisive."

Murdoch also said that he was interested in meeting Sen. Barack Obama, D-Ill., and would love to see former Speaker of the House Gingrich enter the presidential race. Gingrich is "the most brilliant and most interesting guy out there," he said, adding that he would "maybe not (be) the best president," though.

Murdoch also argued that New York Mayor Michael Bloomberg is a "very able chief executive" and would win a lot of votes on both coasts. He said Bloomberg has done "a superb job in New York."
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