Murdoch: $2 Billion Internet Budget Still “Feels About Right” But Door Still Open

The News Corp. earnings call is still going on but worth nothing that Chairman and CEO Rupert Murdoch met the persistent questions about his internet moves head on during his opening remarks. Murdoch said the company’s strategy by creating Fox Interactive Media is “both offensive and defensive.” (See extended comments for detailed excerpts.) As for spending, Murdoch said the $2 billion budget he mentioned earlier is still operative — “feels about right” — but he left the door wide open if deals make sense. He said none of the deals that may be in the works now are major money.

— Asked about interest in AOL, Murdoch said, “We’ve not made any offer to them of any sort for any participation. … It would be quite wrong to say we were in negotiations. We were just looking. I don’t expect anything to come of it. It may, but … ”

— Asked if the profits or the companies acquired by FIM would take a hit during the transition, COO Peter Chernin said, “We would not expect the profits to decrease.” They expect any investment in technology to be more than offset by ad sales growth. He added, “We expect to see the segment growing.” News Corp. will break interactive out as a segment but probably not until the next fiscal year, which means the first sight of standalone results would be this time next year. Not sure that’s going to thrill analysts.

— Both Murdoch and Chernin took pains to mention the length of time the internet strategy has been in the works, as if to brush aside comments from others like Sir Martin Sorrell about moving in haste. Murdoch said each of the major acquisitions thus far had been on the radar as far back as Februrary.

— Asked about search, Murdoch said the video seacrh engine hinted at in a previous call — presumed by many to be Blinkx — was still in play.

— In addition to expected advertising increases to grow the segment, Murdoch cited upcoming launch of in Britain and other countries, an American Idol site in 2006 and an anticipated boost across IGN from the new xBox.

More in extended entry here

mp3logo1.gif You can download the audio here. (12.2 Megs, 1 hour, 6 min.)

Murdoch explains his internet strategy: The questions you hear most frequently, not necessarily in this order are ‘what’s your overall strategy? Will you stop at $2 billion in investments? And how much money can you make?’ Let me try and address each of these.

First, our strategy is both offensive and defensive: Offensive in the sense that we think we’re in a great position, possibly the best position of any media company today, to take advantage of the unique content we have in news, sports and general entertainment and to generate real revenue to profits with this content in a broadband-enabled world. Offensive, also, in the sense that among those who use the internet most often — teens and young adults — we at News Corp. have more success reaching them than any other single content provider in the world. We know how to program for this audience. We know how to market our product to them and we have a mass of content from ‘The O.C.’ to ‘The Family Guy’ to ‘The Simpsons’ to the AFL to our vast film and television library to reach them.
Defensive in the sense that we recognized more than a year ago that to sit on the sidelines while more and more advertising revenue migrated to the internet and broadband expanded very fast would have been a dereliction of our responsibility. We resolved then to seize the opportunity รข