Rid of MySpace, Murdoch should focus on his space
By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Rupert Murdoch’s experience with MySpace should inspire him to focus on his space. Mercifully for shareholders, the octogenarian media mogul’s failed six-year experiment in social networking ended on Wednesday, with his News Corp empire selling the site for about $35 million, a fraction of its original price. The deal serves as a pointed reminder of Murdoch’s many poor uses of capital of late. Big TV is where the company’s resources are best allocated.
Murdoch’s tabloid sensibilities mean he knows a hot story when he sees one. Investing $580 million in MySpace in 2005, when Facebook was still in its infancy, looks outrageous only in hindsight. But not long after News Corp took control, the site began its rapid descent.
Multiple high-profile bosses couldn’t set a sensible strategic direction for MySpace as Facebook passed and then crushed its rival. Murdoch’s expensive attempt to jump on the iPad bandwagon, the much-ballyhooed electronic magazine The Daily, so far looks a dud, too.
Murdoch’s zeal for newspapers hasn’t helped either. He paid $5 billion in December 2007 for Dow Jones, the parent company of the Wall Street Journal, only to write it down to roughly $2 billion about a year later. Worse, Murdoch surrendered his stake in U.S. satellite TV operator DirecTV in 2006 in exchange for the stake in News Corp owned by cable mogul John Malone, who might have stood in the way of the pursuit of Dow Jones. Though News Corp booked nearly a $5 billion gain on DirecTV, that company’s shares have tripled over the last five years. News Corp’s are down 13 percent over the same span.
DirecTV was an especially big loss because its business is central to what News Corp does best. Its British and Italian satellite TV businesses have performed well. And with rare exceptions like the Fox Business Network, Murdoch has proven a master at producing television programming in the United States. American Idol has been a hit for nearly a decade and the Fox News channel remains a huge money-spinner.
But even at 80, Murdoch is chasing something new. He has hired the head of the New York school system to start up an education division, so it’s not obvious he has learned the lessons of misplaced endeavors like MySpace.