News Corp lost $254 million on MySpace, the company said as it reported revenue that beat analysts’ expectations.
The loss pushed News Corp.’s Q4 net income down 22 percent to $683 million.
News Corp said MySpace’s losses during the April-to-June Q4 in which it was sold had increased from the previous year. In fact, the company says a $614 million annual operating loss in the Other division that housed MySpace was primarily due to that site’s growing losses.
But cost cuts enacted in MySpace’s final days as a News Corp company began to filter through – by the time MySpace was sold, the quarterly divisional loss had slimmed by a fifth from last year to $137 million.
Company revenue grew by a tenth to $8.96 billion, beyond the $8.5 billion analysts had forecast. It was led by the Television division.
In the Publishing division that houses newspapers and books, more advertising and higher sales at Wall Street Journal helped operating profit bounce up 37 percent from a year ago, to $270 million.
Update: Perhaps the most astonishing thing about the MySpace loss was the company was valuing it at nearly $300 million even as it was trying to sell the social network for $100 million. News Corp. (NSDQ: NWS) acquired MySpace for $580 million in 2005; a year later, Rupert Murdoch insisted it could be sold for $6 billion. In June, News Corp. sold 95 percent of MySpace for roughly $35 million. The loss that took News Corp.’s earnings down was based on how News Corp. valued MySpace at the time of the sale.