MySpace gets short leash (perhaps noose) from News Corp.

Summary:News Corp. has revamped MySpace and relaunched the site, but patience may be wearing a bit thin. In fact, MySpace will be judged "in quarters, not in years."

News Corp. has revamped MySpace and relaunched the site, but patience may be wearing a bit thin. In fact, MySpace will be judged "in quarters, not in years."

MySpace, meet short leash---or is that a noose?

On the company's earnings conference call, News Corp. Chase Carey gave a state of MySpace, threw old management under the bus and said that the company is working on stemming losses. News Corp.'s "other" line---essentially MySpace---delivered an operating loss of $156 million on revenue of $298 million in its fiscal first quarter. A year ago, MySpace had a loss of $126 million on revenue of $400 million. Carey said:

We have been clear that MySpace is a problem. We recognize that we had to redefine and largely rebuild this business. We believe the foundation was there to warrant this effort and it has been our focus this year. We have made adjustments in the cost structure and most recently by consolidating ad sales and most importantly in the last few weeks we have relaunched MySpace with a focus on social entertainment. We feel really good about this relaunch product and it has been generally well received by the opinion makers in the business but we recognize the critical issue is building interest with consumers. We also recognize the challenges we face in doing so. The current losses are not acceptable or sustainable. Our current management did not create these losses, but they know we have to address them. Again, I give them great credit for pouring their hearts and sweat into creating a great new MySpace experience that has the potential to be an exciting business for us.

However, Carey also said:

We equally know we need to make real head way in the coming quarters to get this business to a sustainable level. Overall, when you have as many businesses and as many regions as we, do it is unlikely that they will all be operating at an optimum level on a short-term basis although we strive to make sure most are.

And the real kicker from Carey is that MySpace will be judged "in quarters, not in years." The upshot: Myspace has to grow revenue and show a clear path to profits. Or else.

Topics: Enterprise Software, Banking, Social Enterprise


Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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