News Corp. sees digital at 10 pct of sales in 5 yrs

NEW YORK, Feb 8 (Reuters) News Corp. Chief Executive Rupert Murdoch said on Thursday over 10 percent of the media company's sales will likely come from its digital businesses, from the Internet to cell phones, in five years.

The view excludes Internet properties owned by its local newspapers, such as the New York Post's NYPost.com site, whose split of digital revenue could well go higher, he said at the McGraw-Hill Media Summit 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 about 2 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, bought MySpace in 2005 for 0 million.

News Corp. also said it would launch a widely anticipated Fox Business Channel on cable television in the fourth quarter that would compete with General Electric Co.'s CNBC But MySpace, the most popular online hangout for teens to swap music and photos, has kept investors sweet on News Corp.'s future growth prospects even as big media rivals contend with weaker advertising for more traditional businesses, from newspapers to radio and broadcast television.

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

The site attracted more than 90 million unique visitors globally in December, according to comScore Media Metrics. It operates in 12 markets including the United States, United Kingdom, Japan and Italy and 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 challenge from Web video sharing site YouTube, bought by Internet search leader Google 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 ... They will be watching someone else very quickly.'' YouTube also faces greater risks from the use of its service to upload copyrighted material illegally than MySpace, Murdoch said. He cited Viacom Inc.'s move last week to demand YouTube remove video clips of its shows uploaded 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 the safety of its users, as adult sex predators have used the service to disguise themselves and seek out unwitting teens.

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

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

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

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

REUTERS DKS BST0105