MySpace Financial Performance: No Longer A Joke UPDATED

MySpace still fails to merit so much as a mention in News Corp's quarterly release, but the financial performance of Fox Interactive Media (some of which is MySpace) continues to improve.  Revenue grew to $518 million in the December quarter, up 41% from a year earlier.  This was a slight deceleration from the 45% Y/Y growth in the third quarter, but the division also turned a modest profit after losing $73 million in Q3.

Precise estimates of MySpace's revenue vary.  In a comment below, Keith Eysmun estimates the Q4 revenue was about $150 million, or a $600 milllion run-rate.  In a recent Forbes' piece, Peter Kafka cites a monthly revenue figure of $28 million, or a $350 million run-rate.  Judging from the Y/Y divisional comparisons, something in the division is still growing extremely fast, and I suspect it's MySpace, but the site's overall revenue may still be relatively small.  My original Microsoft comparison, therefore, was premature.  Using Keith's revenue estimate, a $15 billion valuation for MySpace would also be approximately 22X run-rate revenue, not the 10x-15x I originally estimated below.

So where does this performance put Fox in the overall scheme of things?  Believe it or not, the division itself is catching up with Microsoft (which generated $624 million in the quarter, up a meager 5% year over year).  Microsoft, moreover, lost a boatload of money--$155 million--which means FIM may in aggregate be a stronger business.  Perhaps this impressive performance will garner Fox's Internet division a bit morerespect. 

Wasn't it just a few months ago that analyst Jordan Rohan was roundly ridiculed for suggesting that MySpace could one day be worth, gasp, $15 billion?  Based on MySpace's current run-rate, that sounds like a less than outrageous 20x-30x (depends how much of FIM's revenue MySpace generates).  Now if only Fox would start taking the Interactive division seriously enough as to bother mentioning it in its quarterly press releases.

Comments

[Keith Eysmun]

Your MySpace revenue estimate is way too high. A better guess for MySpace would be $150M in the quarter, and that might also be high.

The "other" division that generated $518M in revenue this quarter includes:

* NDS (DBS card company that had $165M of revenue)
* News Out of Home (an outdoor advertising company that probably does another $90M of revenue per quarter)
* The rest of FIM that isn't MySpace
* Fox Mobile (a couple million per quarter)
* Global Cricket Corp
* Some radio stations
* A record company

[Henry Blodget]

Keith, Thanks. Good points and very helpful. I'll update the post.

[Niki Scevak]

This article in the Journal today cites the company as saying that MySpace had $75m in revenue last quarter. Not really an MSN like number.

http://online.wsj.com/article/SB117090723850301868-search.html

[Neal S. Lachman]

I believe that MySpace really could be worth between $10-15B, but only if it can retain its userbase and further monetize it. There is substantial growth opportunity for MySpace. $600M could easily become $1.6B in the next few years. A multiple of ten is below industry-average. I thinks even a multiple of 20 is justifiable for a growth-business.

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