This isn't your father's Rupert Murdoch. With this morning's announcement that his News Corp. (NYSE:NWS) empire was buying video game enthusiast site IGN for $650 million, the entertainment megamogul continues to capture more of young America's online attention.
It's a move that enhances the company's summer decision to acquire MySpace.com parent Intermix (AMEX:MIX). Between IGN's collection of sites and the 27 million unique monthly visitors that Intermix brought to the table, News Corp.'s suddenly significant interactive arm reaches 70 million unique visitors eyeballing 12 billion pages a month.
But was this all necessary?
Last month, Murdoch's media conglomerate produced healthy results for fiscal 2005. Sales rose by 15%, with earnings soaring by 39%. These results hardly suggest that News Corp.'s success depends upon the aggressive pursuit of online growth opportunities.
Look deeper into News Corp.'s numbers, though, and you'll find a company that's faring well at the box office and in cable news and sports but struggling with flat operating income at its Fox broadcasting network. The company's recent push online may be an attempt to recapture more of the young audience the Fox network desires.
Teens and young adults have flocked to MySpace's social networking site. Bands and content producers have quickly set up camp there as a way to influence the decision-making process of upscale youth with disposable income to burn. IGN is different, given its typically male audience of diehard gamers, but it still skews toward the young audience that Murdoch craves to keep his empire relevant and booming.
IGN's properties also include the great Rotten Tomatoes movie rating site. As an aggregator of critic reviews, it will be an indispensable appendage for Fox, given its filmmaking stronghold. Earlier this year, while interviewing Netflix (NASDAQ:NFLX) CEO Reed Hastings, I asked him about the merit of acquiring a site like RottenTomatoes.com as a way to have cheap access to movie-buff traffic. He dismissed the notion, even as Amazon.com (NASDAQ:AMZN) has continued to milk the benefits of its IMDB.com purchase.
The move to scoop up IGN leads us to CNET (NASDAQ:CNET). Since being recommended in our Motley Fool Rule Breakers newsletter two months ago, the stock has risen by nearly 20% -- partly on takeover speculation. One of CNET's more prolific properties is the popular Gamespot.com, a peer of IGN. Will Murdoch next swallow CNET, monopolizing the video game crowd? Both IGN and Gamespot are likely to lure a whole lot of traffic in the near term; all three video game console makers will be rolling out their next-generation systems over the next year. An attention-hungry empire would hate to miss out on that traffic.
However, CNET would cost News Corp. far more cash than the purchase price of MySpace and IGN combined. I wouldn't recommend holding your breath for a Murdoch-owned CNET, but at least now the rumor mill has a new name to accompany Yahoo! (NASDAQ:YHOO) on the list of potential suitors.
As any IGN addict will tell you, this is where the game gets interesting.
Amazon.com and Netflix are Motley Fool Stock Advisor recommendations, while CNET is an active Rule Breakers selection.
Longtime Fool contributor Rick Munarriz loves playing games, but he doesn't own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
