News Corp says MySpace risks $900m Google deal

Weaker traffic means the News Corp division is now expected to receive about $100m less from a deal that had underpinned investors’ confidence in the MySpace acquisition, executives revealed.

“We’re still losing traffic,” said Chase Carey, chief operating officer of News Corp. “It’s a business in transition.”

The surprise disclosure, as News Corp announced an 11 per cent rise in group net profit and raised its outlook, is the latest disappointment at MySpace, which made social networks a household phenomenon.

Google agreed in 2006 to pay News Corp $900m for the exclusive right to provide search advertising to the once-thriving site over three years if MySpace could guarantee a minimum volume of traffic.

The agreement essentially paid for the estimated $580m purchase price of MySpace, which now trails rival Facebook.