Google Inks $900 Million Dollar Deal With News Corp.
By Anne Becker -- Broadcasting & Cable, 8/7/2006 10:37:00 AM
In a sweeping financial deal, Google has agreed to pay News Corp. $900 million for access to the flood of traffic on its popular social networking site MySpace, plus most of its other online properties.
Google, through its AdSense program, will now be the exclusive search and keyword targeted ad sales partner for MySpace, along with the majority of the other online properties owned by News Corp’s Fox Interactive Media. MySpace had previously used Yahoo! for its search functions.
MySpace, which is slated to hit 100 million profiled users this week, will now let visitors conduct Google searches without having to leave the MySpace page. The majority of people who leave the MySpace site do so to go to Google, Fox says. Google’s services will become integrated into Fox Interactive Media properties no later than fourth quarter.
Per the deal, Google is locked into making a guaranteed minimum revenue share payments to Fox Interactive Media of $900 million, from the first quarter of 2007 through the second quarter of 2010, provided Fox reaches traffic commitments. By comparison, Merrill Lynch analyst Jessica Reif Cohen recently predicted the total revenue for all of Fox Interactive Media for the entire year of 2006 would be just $296 million.
Under the deal, all MySpace pages will likely contain a Google search bar. MySpace users can use Google from the site to search the web, blogs, vertical categories like music and profiles.
Other Fox Interactive properties that will now be served by Google include videogame and entertainment site IGN and movie site Rottentomatoes.com. The one major Fox property not included in this deal is Fox Sports, which is locked into a partnership with Microsoft.
“We are incredibly enthusiastic and incredibly grateful, frankly, to the Google team for acting so quickly on this opportunity and we’re ready to get started,” said Ross Levinsohn, President of Fox Interactive Media, in a conference call announcing the deal, one apparently finalized hastily over the past day or so.
“Wherever there’s a lot of users and a lot of growth there’s a lot of opportunity,” said Google CEO Eric Schmidt. “The reason to think this is ultimately a massively important deal has as much to do with how these very clever folks here at Fox have evolved their site to follow this amazing growth we’re seeing.”
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