Murdoch Says He’s Waiting Out AOL Rivalry

Nov 10, 2005  •  Post A Comment

News Corp. Chairman and CEO Rupert Murdoch said Thursday that he has considered taking an ownership interest in Time Warner’s America Online but hasn’t held any serious talks yet, in part because of the search-engine battle currently taking place between two AOL suitors: Google and Microsoft.

“We have not made any offer to [AOL] of any sort for any participation, but we have looked at whether there would be ways to work with them,” Mr. Murdoch told analysts during the company’s fiscal first-quarter earnings call.

However, he noted that the battle taking place between Google and Microsoft over which company will provide Web search services to AOL has taken precedence among AOL executives. “That has to be resolved first before any issue comes up on ownership,” Mr. Murdoch said.

Meanwhile, he repeated that the $2 billion his company might spend on Internet-related acquisitions “still feels about right,” with the company having spent around $1.4 billion so far on companies such as IGN Entertainment and Intermix Media. While he declined to give specifics on future acquisitions, Mr. Murdoch said News Corp. continues to negotiate to buy a search company, and revealed that the company’s specialty is video search.

“That deal has not been consummated, but it’s not a large investment,” he said.

Also on Thursday, News Corp. reported that it swung to a fiscal first-quarter loss of $433 million, compared with a year-earlier profit of $625 million. The company attributed the drop to an accounting charge totaling $1 billion for the write-down of the value of its broadcast TV licenses. The charge reflected new accounting rules that forced the company to value the licenses differently. Revenue for the three months ended Sept. 30 rose 10 percent to $5.7 billion.

The revenue growth was driven by continued strength at the company’s cable channels and movie studio, which helped to offset declines at the television unit.

The cable operation continued to benefit from ratings and advertising growth at FX and Fox News Channel, while television stations posted declines due to higher programming costs associated with local sports rights, the expansion of local news at several stations and higher promotional costs associated with the earlier launch of this year’s fall season.