News Corp sees digital at 10 pc of sales in 5 yrs

New York, Feb 9: News Corp. Chief Executive Rupert Murdochsaid on Thursday over 10 percent of the media company's sales willlikely come from its digital businesses, from the Internet to cellphones, in five years.

The view excludes Internet properties owned by its localnewspapers, such as the New York Post's NYPost.com site, whose split ofdigital revenue could well go higher, he said at the McGraw-Hill MediaSummit in New York.

''It's probably the biggest profit driver we have,'' Murdoch said of digital units such as popular social network MySpace.

''There's no reason ... given time ... we won't see it grow.''Revenue from sites including MySpace are expected to account for about2 percent of News Corp.'s fiscal 2007 sales.

News Corp., which also owns the 20th Century Fox movie studios,Fox News cable network and the Times of London newspaper, boughtMySpace in 2005 for 0 million.

News Corp. also said it would launch a widely anticipated FoxBusiness Channel on cable television in the fourth quarter that wouldcompete with General Electric Co.'s CNBC But MySpace, the most popularonline hangout for teens to swap music and photos, has kept investorssweet on News Corp.'s future growth prospects even as big media rivalscontend with weaker advertising for more traditional businesses, fromnewspapers to radio and broadcast television.

For example, MySpace's deal to use Google Inc.'s Web searchresults and sponsored links on its site could net News Corp. up to 0million in shared ad revenue.

The site attracted more than 90 million unique visitors globallyin December, according to comScore Media Metrics. It operates in 12markets including the United States, United Kingdom, Japan and Italyand aims to double its number of new markets this year.

News Corp. also plans to use MySpace as a distributor of TV shows and movies produced by Fox and other companies.

No Rival In Youtube?

Its online video ambitions face a challengefrom Web video sharing site YouTube, bought by Internet search leaderGoogle Inc. late last year.

But Murdoch dismissed the idea that YouTube could present serious competition.

''It's harder to monetize it,'' he said, referring to the ability to harness YouTube viewership to deliver advertising.

''If you interrupt the flow of videos with commercials ... Theywill be watching someone else very quickly.'' YouTube also facesgreater risks from the use of its service to upload copyrightedmaterial illegally than MySpace, Murdoch said. He cited Viacom Inc.'smove last week to demand YouTube remove video clips of its showsuploaded by users without permission.

''There are big problems involved, mainly one on copyrights,'' Murdoch said.

One of the main risks to MySpace's business model concerns thesafety of its users, as adult sex predators have used the service todisguise themselves and seek out unwitting teens.

''We're doing everything we can,'' Murdoch said.

While MySpace has been introducing technology to identify andblock known sex offenders on its service, it faces growing criticismthat it has not done enough to protect members.

The families of six teenage victims raped by men they met onMySpace are suing the company for negligence. A group of 39 U.S. stateattorneys general is also considering legal action against MySpace ifit does not raise the legal age to use the service and take steps toverify members' ages.

News Corp. Class A shares gained 69 cents, or nearly 3 percent, to .03.

Reuters>