Will News Corp.'s bigger worries cause MySpace to be passed by Facebook?

Media conglomerate News Corp. said today that it's continuing to feel the pinch of the economy and, like many other industries, is finding its impact to be more severe than once expected.  For its second quarter, the company reported an adjusted net loss of $6.4 billion, or $2.45 per share, compared to a net income of $832 million, or 27 cents per share, for the same quarter a year ago. Revenue for the quarter was $7.9 billion, down from $8.6 billion in the year-ago quarter. (Statement)

Broken down by business segments, it's clear that declining revenues and smaller profits are widespread. But only one segment - the one labeled "Other" - reported a loss of income for the quarter. That segment largely consists of Fox Interactive Media, which largely features MySpace.

Last year, the segment reported a profit of $23 million for the quarter. This year, profits dropped by $61 million, ending the quarter with a $38 million loss. That drop was due, in part, to a decline at Fox Interactive Media, which was due, in part, to "increased costs associated with the growth in unique users, international expansion, the launch of MySpace music."

Talk about honing in, huh?

Actually, News Corp. didn't have much to say specifically about MySpace. Instead the company focused in on the larger macro economic picture and the impact of advertising slowdowns on its newspaper and television businesses.

But social networking giant MySpace also should be something to watch as this could be its final year as the No. 1 social networking site in the United States. Facebook, which already has the top seat worldwide, is on a growth swing that could send it sailing past MySpace, which has had relatively flat growth, in 2010. At least that's the conclusion drawn by TechCrunch after analyzing comScore figures:

Facebook, which became the largest worldwide social network in mid 2008, is still playing catch up to MySpace in the U.S. They have 54.5 million monthly unique visitors, says Comscore, compared to nearly 76 million for MySpace. But Facebook’s growth rate in the U.S. averaged 3.8% per month over the last twelve months. MySpace’s U.S. growth rate is 0.8% per month. That’s nothing to be ashamed of, but unless things change a lot, Facebook will overtake MySpace to become the largest social network in the U.S. in…2010.

(Image credit: TechCrunch)

When News Corp. paid $580 million in cash for the parent company of MySpace back in July 2005, it was considered a bit of a gamble, largely because it was young and its durability was untested. At the time, the New York Times wrote: "In buying MySpace, the company is following Mr. Murdoch's edict for the far-flung company to follow the increasing numbers of audiences and advertisers online."

Privately-owned Facebook, which celebrated its fifth birthday yesterday, continues to show steady growth. Meanwhile, MySpace - only a few months older - finds itself with flat-growth and potentially stuck as a sub-category in a business segment labeled "other."