Merrill Lynch Conference: NWS COO Chernin Says Digital Revenue Growth Outlook Remains Strong

News Corp. (NYSE: NWS) plans to sharpen its focus on digital initiatives and on the developing world, said Peter Chernin, the company’s president and COO, in a conversation with Merrill Lynch analyst Jessica Reif Cohen, at ML’s Media Fall Preview conference in Marina Del Rey, CA., on Monday. Despite the recent credit crisis, Chernin expressed a fairly bullish attitude regarding its potential impact on its new media businesses, though it could cause some slowing of growth among developing nations. “We see no softening of prices in the digital world, in terms of the credit crisis.” he said. Other subjects from Cohen’s and Chernin’s Q&A covered:
Social Media category heats up: MySpace We see the category growing, obviously. Facebook is a strong competitor. But our leadership, MySpace’s leadership, will be maintained by continued technological offerings, such as MySpace TV and other content. We are also opening up one new territory a month, that will be a key growth area. Targeting technology and optimization technology, have been seeing encouraging results. He also expects that operating profit could grow by 50 percent.
Traffic not an issue: There are no traffic goals that we need to hit. It’s growing and we have more inventory, more impressions than we know what to do with. It’s about increasing ability to monetize, not aim for traffic targets.
Ad Support vs. Download: My view of the world is that TV business is going to be streaming ad supported, that’s the focus of [the video JV with NBC Universal] Hulu, though it will offer transactional opportunities as well.
Dow Jones (NYSE: DJ): Cohen pointed to News Corp.’s past statements that it could realize $50 million in cost savings. Chernin demurred to offer specifics, saying: “We believe there are significant cost savings on the print side. We would like to see the deal close before we offer any numbers or predications. In the broadest terms, Dow Jones’ revenue comes from two areas, and one of those areas, print, is under-leveraged. The Wall St. Journal is the dominant financial brand and we plan to monetize that better; that could mean more more digital channels and more print opportunities. We don’t own the company yet, so stay tuned.
Girding for writers strike: Very pessimistic about the contract dispute between the Alliance of Motion Picture and Television Producers and the Writers Guild of America. We have most of our movies lined up to be produced over the next 60 days, which positions us well for the summer releases. I think it will have a minimal impact if a strike happens. Our animation is produced a year in advance, we have ordered a number of reality shows. The viewer would notice very little change.
Ad market outlook: U.S. and Australian markets are strong nationally, the U.K. is off slightly. In the U.S., political advertising hasn’t been as high as we would have hoped. But there’s every reason to expect that to gain momentum. Unless you’re advertising home sales and mortgages, it’s business as usual.
More to come. Webcast