News (NWS) 07: MySpace Growth Slower Than Expected

News Corp.’s 4Q overall results fine: net up to $890 million, or 28 cents, from $852 million, or 27 cents, operating inc up 18% to $4.45 billion, revs up 8.6 per cent to $7.37 billion. News still doesn’t break out Fox Interactive Media as a stand-alone, lumping it in the “other” category along with billboards, rugby leagues, etc. Rupert makes up for it by touting MySpace and FIM at first opportunity: FIM hit $550M revenue and squeaked out a $10M profit. Next year he projects MySpace revs at $800M, and FIM at more than $1 billion with a 20% profit margin.  But the 07 numbers, at least, are below expectations.

Key points:

First, MySpace appears to be growing much more slowly than most people think.  Based on Murdoch’s ’08 projections, let’s assume MySpace represents 80% of FIM’s revenue. That would mean $440 million of revenue this year. In December Murdoch told me MySpace was generating $30 million a month, or a $360 million run rate. This means the company has only grown about 20% in the last six months (nice but hardly super-charged). A positive note is that the $900 million, 3-year Google deal hasn’t fully kicked in for MySpace/FIM’s 07 results, so there’s upside there. Chernin expects half of FIM’s growth to come from Google deal next year, and the rest from improved ad sales. Time to get to work, Mike Barrett.

Second: The $600M deal for MySpace was genius, but the $600M spent on IGN the same year seems less and less impressive: It’s going to account for less than 20% of FIM’s revenues (remember that FIM also includes FoxSports and Photobucket).