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Media

Google (GOOG) Deal Will Hurt News Corp (NWS) Earnings

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By Douglas A. McIntyre Updated Published
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Google (GOOG) has a three-year deal to sell search advertising on News Corp’s (NWS) huge social network MySpace. The arrangement will soon be up for renewal. Google did not get a return on its $900 million revenue guarantee and there are rumors that it wants to cut its obligation from $300 million a year to less than $100 million.

If News Corp cannot come up with a Google partnership to match the one that is ending, the earnings at its Internet unit could be significantly undermined.

News Corp’s solution to the problem may be to offer Google access to a number of its other Internet properties. This would be likely to include the Fox News site. But, there are not enough visitors to the sites to make up for Google’s need to see a return that may be three times what MySpace has given it. The MySpace audience is bigger than those from all of the other News Corp sites combined.

According to Reuters, “News Corp hopes to sell Google Inc. access to a greater swathe of its media properties.”

The MySpace deal was too much of a failure for Google to renew a contract that has anywhere near the value that the one which is expiring did. Investors can brace for bad earnings news from News Corp.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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