Mobile Phones Are Content’s Next Big ‘Growth Platform,’ Murdoch Says

As a harbinger of that expected boom, Murdoch said, around Jan. 1, Cingular began offering MySpace to subscribers at $3 a month in a revenue-sharing arrangement with the social-networking site. Over 200,000 Cingular subscribers have signed up for MySpace since the offering was launched, he said. Cingular has “never seen a service grow so fast,” he said.

Still, Murdoch said he doubts movie delivery to mobile phones will ever thrive as a big business. “It’s possible” it will, “but I don’t believe so,” Murdoch said. “The big emphasis at the moment is on bigger and bigger screens with higher-quality pictures,” he said. And the prices of such displays is “crashing, because there’s just so much competition,” he said.

“One would think” that the increasing proliferation of big-screen HDTV sets would crimp theatrical box-office revenue -- but it won’t, Murdoch said. Consumers always will clamor for an evening out at the movies, he said. A year ago, there seemed to be an effect because box office receipts fell 5%, he said. “Well, this year, they're up 5%,” he said. “It really depends whether there are any good movies out there.”

News Corp. is “very, very optimistic” about the future of its Fox studio operations, Murdoch said. A walkthrough at any CES will show “there are going to be more ways to show films,” he said: “We just want to be paid for it.” Globally, growth in catalog DVDs has flattened, but for new films, the DVD market is “better than ever,” Murdoch said. On piracy, Murdoch said that “we have to work a lot harder” on stamping out the problem -- not by “running to Washington” seeking legislative remedies but by “getting the technology right.” A disturbing trend is the growing availability of high-quality counterfeit DVDs originating from Russia and sold on the street, in packaging that looks just like the real thing, but for 1/5 the price, Murdoch said.

Though News Corp. is divesting its stake in DirecTV, the satellite provider “in the short term is improving its service,” Murdoch said. “It’s wonderful.” Its HD set-top with PVR costs $500, but that’s expected within a year to drop to below $300, he said. When that happens, DirecTV’s churn will drop in 1/2, he said. So DirecTV can look forward to “2 or 3 good years” ahead, he said: “The problem is broadband. They cannot deliver broadband.” There may be “some great technological breakthrough” coming to remove that disadvantage, but “I don’t think it’s WiMAX,” Murdoch said. “I don’t think it has the power to compete with cable or the telephone companies.”

In one of the keynote’s few bits of hard news, Murdoch said an announcement is planned soon on launching the Fox Business News Channel “sometime in the fall” to compete against CNBC. But the announcement won’t have “too much detail” so as not to tip off the competition, Murdoch said. The aim is to make the new channel more “business-friendly” than CNBC, which is too quick “to leap on every scandal,” Murdoch said.

Internet revenue, though today accounting for only 1% of News Corp.’s total, could top 10% within 5 years, Murdoch said. Internet also could become “the leading profit driver that we'll have,” he said. The IGN videogaming site, though not growing at MySpace’s meteoric rate, was up well over 100% in page views last quarter from a year earlier, Murdoch said. There has been “a lot of activity” on IGN since the launch of PS3 and other next-generation platforms, he said: “We're pretty happy with it.”