RUPERT MURDOCH has delivered a sobering assessment about the internet as a growth engine, revealing search and advertising revenues at News Corp's Fox Interactive Media division - which houses the popular MySpace networking site - have stalled.
The new-media unit, which has invested heavily to expand MySpace, contributed just $US7 million ($10.4 million) to News Corp's $US818 million second-quarter operating income, the company said on Friday.
There was a "slight downturn" in revenue at the social networking site, Mr Murdoch said. That compares to $US179 million News Corp made from newspapers including The Wall Street Journal and information services such as the Dow Jones news wire.
Asked about his views on the long-term viability of the internet, Mr Murdoch said generating a return on investment for assets such as MySpace, which News Corp bought for $US580 million in 2005, was still a challenge.
"I think we have to find new ways to monetise our huge audiences," he told analysts. Websites reaching very specific target groups showed solid revenue increases, with the Journal's site on track to book $US120 million in advertising this year. Search sites were also doing well.
"But overall, you have a problem in that there is an almost infinite increase in inventory for websites and for display [advertising]," he said. "There is constant downward pressure on the rates you could get."
Providing more data and collecting information about web users to more effectively sell them to advertisers would be "increasingly important", Mr Murdoch said.
MySpace already uses information that members put in their profiles to target them with specific ads, which he said was showing "very promising returns".
With profits from the internet in single digits, Mr Murdoch hinted reports of the demise of newspapers were premature. That is despite hefty write-downs in the value of his papers and TV licences which resulted in News Corp's $US6.4 billion quarterly loss. "I am extremely happy with all of our newspapers," the media mogul said. "There has never been a greater appetite for news in the community. And we will be able to capitalise on that pretty well."
Newspapers have come under pressure as the global downturn has accelerated a move of high-yielding advertising to the internet. Like many of its peers, News Corp has started cutting jobs at its newspapers in Australia and offshore.
But Mr Murdoch, who copped heavy criticism for buying the Journal's parent company, Dow Jones, for $US5.6 billion in 2007, said he remained a firm believer in newspapers, television and film as mass media.
"Quite simply, as long as advertisers need to move product and sell brands, these industries will remain strong" he said. "I have got great faith and if we continue the way we are going, we may even get lucky by not having so much competition at the end of it all."
But he ruled out further print acquisitions for now. Asked about reports he was eyeing The New York Times, Mr Murdoch said that he wasn't interested.
"Apart from the German pay TV business Premiere, "I have looked around and I really haven't seen any businesses that I really want to buy", he said.