BUSINESS BLOGS
BUSINESS BLOGS
category: business
29 Jan 2008

Rupert Murdoch struck gold when he acquired Intermix - parent of MySpace - for $580M in 2005.  Subsequently, he bundled all of his digital assets into Fox Interactive Media, headed up by the man who urged him to buy Intermix in the first place, Ross Levinsohn.

A year later, he sold rights to power search results and serve up contextual ads on the FIM network to Google for a cool $900M.  News Corp. had to guarantee minimum impressions, and given MySpace’s massive growth (the site tripled in size since the acquisition), it’s fair to assume he’s met those guarantees on his way to earn the $45M monthly earn-out (the deal was $900M over approximately 2 years).  FIM will do $800M in revenues this year.

We partner with News Corp. today by way of providing video content to MySpace TV.  I also used to work for News Corp. briefly, but I don’t claim to have any inside information on Google’s $900M deal with FIM.  The following is strictly me pontificating.

What I think is genius is the fact that News Corp. today signed a deal for its new unit, Dow Jones, with Microsoft, granting MSFT the right to power search and contextual ads.  Google and MSFT are sworn enemies.

While some folks at Google might say “what the…” over this deal, I think Murdoch is showing once again that he gets the last laugh while giving his critics the one-finger salute.

Here’s why: when Murdoch was trying to acquire Dow Jones, everyone warned him to keep Dow Jones separate, at least from an editorial perspective.

By signing this deal with MSFT, Murdoch - it could be argued - is doing just that, by keeping Dow Jones separate from Fox Interactive Media, it gives Murdoch to ability to work with both Google and Microsoft, test both companies’ monetization engines and ultimately walk away with a far better from both when the deals expire.

Genius, pure genius.

Disclaimer: News Corp. was my former employer from Sept. to Dec. 2006; WatchMojo.com partners with MySpace TV.