Paidcontent.org reports that News Corp.’s Fox Interactive Media - my former employer - generated $125M in the latest quarter, 2006 Q4. News Corp. aggregates Internet operations in a line item called “Other”, let alone break down the numbers from each subsidiary. I’m not in direct talking terms so I have no clue how they are doing.
Anyway, some thoughts:
The fourth quarter implies October, November and December. We’re not stating the obvious, we’re highlighting this because Google signed a massive deal with Fox Interactive Media for $900 million over 3 years and 9 months, or 45 months, at $20M per month in August, 2006.
That means $60M per quarter or almost 48% if the deal was live by October, 2006. We do not think it was. In fact, our memory suggests that IGN and other sites launched Google on December 1, 2006. If anyone can clarify this, please let me know!
FIM is made up of:
- IGN Entertainment which is made up of media properties (including IGN, Game Spy, Rotten Tomatoes, Askmen, FilePlanet, Direct2Drive, Team Xbox, 3D Gamers and Game Stats), in-game advertising and digital downloads
- MySpace.com - who needs no intro as the darling/crown jewel.
- News Corp. “legacy” sites such AmericanIdol.com, FOXSports.com, newspaper sites etc.
Let’s start the guessing game:
When IGN filed to go public early in 2005, it disclosed some revenue figures. Revenue was up from $11 million in 2002 to $17 million in 2003 (+54%) and to an impressive $47 million in 2004 (+176%). I am pretty sure it was gunning for $70M in 2005, the IPO year. That would have been a rise of 48%. I have no doubt IGN could have done more. The company was a selling machine. The company’s bench was breathtaking. Not to brag but to give them props: I was a helluva salesman and when they bought our company, I could see they did not need me (they actually told me so, though…). As a non-UGC property, I’d estimate they did $100M in total revenue in 2006. Assuming the $70M is correct (it’s conservative), that is a 43% spike. I had heard that IGN had grown in pageviews quite a bit, so this is all very plausible. The point is: a $100M yearly figure implies $25M per quarter from IGN.
Mr. Murdoch said that the “bulk” of the $125M came from MySpace, I do not think he means more than 50%, just that it’s the largest contributor. I would peg the monthly revenue at $20M, so $60M for the quarter came from MySpace.
The Google/FIM is “binding,” according to COO Mr. Chernin, so we project that the $900M deal, 45-month deal is in place, so that is $20M per month, but not for the entire duration of Q4, and only as of December so that means $20M for the quarter from Google’s massive deal.
What’s the tab?
IGN Entertainment @ $25M
MySpace @ $60M
Google @ $20M
Rest @ 20M
TOTAL: $125M
Does that mean that FOXSports, AmericanIdol and News Corp.’s entire portfolio of news sites only generated $20M? Well, $20M ain’t that bad. And, consider this quote: “Some are profitable. Nothing of significant amounts, some like $5 million, some like $10 million; those profits are credited to those operations.”
So more or less, that’s what we think is the breakdown. Any thoughts?
Update: When I first read Paid Content’s report on the topic, they said “MySpace makes $20K per month,” which was, well, crazy… turns out it was a typo, they updated it and now say ”Looking at MySpace now, ad revenue is $25 million a month and growing. It’s a huge success.” I’d be surprised if MySpace did $25M per month in Q4 2006, could be that it now makes $25M… otherwise that would have pegged Myspace’s Q4 revenue at $75M, or 60%. That could be true, but then the other assets are really not driving much revenue… who knows.
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